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    Question

    The dummy variable trap occurs

    when
    A a dummy is not defined as zero or one Correct Answer Incorrect Answer
    B There is multicollinearity among the independent variable Correct Answer Incorrect Answer
    C the intercept is omitted Correct Answer Incorrect Answer
    D There is autocorrelation Correct Answer Incorrect Answer

    Solution

    The Dummy Variable trap is a scenario in which the independent variables are multicollinear - a scenario in which two or more variables are highly correlated; in simple terms one variable can be predicted from the others

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