True False Uncertain with Explanation Dummy variables are va

True, False, Uncertain with Explanation:

“Dummy\" variables are variables added to the regression that have no explanatory power but serve only to increase the number of degrees of freedom.

Solution

False.

Explanation: Dummy variables may or may not have explanatory power. They may be explanatory or outcome variables. In a regression model, a dummy variable with a value of 0 will cause its coefficient to disappear from the equation. Conversely, the value of 1 causes the coefficient to function as a supplemental intercept, because of the identity property of multiplication by 1.