Questions

ECON 460-COMB Ch07Quiz

Multiple choice

Which of the following assertions apply (in general) to the constant term in a linear regression? (Select all that apply.)

Options

A.It should not be suppressed.

B.Its estimates should not be used for inference.

C.Its three components can be easily distinguished.

D.It may or may not be of theoretical importance.

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Step-by-Step Analysis

When evaluating statements about the intercept (constant term) in a linear regression, it's helpful to ground the discussion in how the model is specified and what the intercept represents. Option 1: 'It should not be suppressed.' In standard practice, we include an intercept term because it allows the regression line to have a non-zero value when predictors equal zero. Suppressing or omitting the intercept would force the line to pass through the origin, whi......Login to view full explanation

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