Week 5 - Non-linearities. Binary variables. Interactions.

Question 1

When can you use logarithms?

Answer 1

Question 2

What is a binary variable?

Answer 2

A binary variable only has two values 1 and 0.

2 They are used to distinguish one category over the rest. Normally, the
value 1 is reserved for the category one wants to focus on

Think switch

Question 3

Binary variables: inference

Answer 3

Question 4

The binary variable trap

Answer 4

If your model is going to have di§erent intercepts, one for
each of the n groups in a categorical variable, then you
need to include n-1 binary variables along with the
intercept.

Question 5

2 How do you deal with categorical variables?

Answer 5

Question 6

Define Interactions

Answer 6