Including an Interaction Term Between Two Independent Variables $X _ { 1 } \text { and } X _ { 2 } \text {, }$

question 35

Multiple Choice

Including an interaction term between two independent variables, $X _ { 1 } \text { and } X _ { 2 } \text {, }$ allows for the following, except that:

• A) the interaction term lets the effect on Y of a change in \(X _ { 1 }\) depend on the value of \(X _ { 2 }\)
• B) the interaction term coefficient is the effect of a unit increase in \(X _ { 1 }\) and \(X _ { 2 }\) above and beyond the sum of the individual effects of a unit increase in the two variables alone.
• C) the interaction term coefficient is the effect of a unit increase in \(\sqrt { \left( X _ { 1 } \times X _ { 2 } \right) }\)
• D) the interaction term lets the effect on Y of a change in \(X _ { 2 }\) depend on the value of \(X _ { 1 }\)

---

Definitions:

Real Property

Land and everything permanently attached to it.

Lease Contracts

Agreements in which one party grants another the use of property, equipment, or premises for a specified period in exchange for rental payments.

Sales Contracts

Legal agreements between buyers and sellers detailing the terms of sale and purchase of goods or services.

Federal Law

Legislation enacted by the federal government of a country, applicable nationwide and superseding local state laws in matters of national importance.