Multiple Choice
The following simple model is used to determine the annual savings of an individual on the basis of his annual income and education. Savings = 
The variable 'Edu' takes a value of 1 if the person is educated and the variable 'Inc' measures the income of the individual.
Refer to the model above. The inclusion of another binary variable in this model that takes a value of 1 if a person is uneducated, will give rise to the problem of _____.
A) omitted variable bias
B) self-selection
C) dummy variable trap
D) heteroskedastcity
Correct Answer:
Verified
Correct Answer:
Verified
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