In the Regression Model Y_i = β₀ + β₁X_i

question 45

Multiple Choice

In the regression model Y_i = β₀ + β₁X_i + β₂D_i + β₃(X_i × D_i) + u_i, where X is a continuous variable and D is a binary variable, β₃

• A)indicates the slope of the regression when D=1.
• B)has a standard error that is not normally distributed even in large samples since D is not a normally distributed variable.
• C)indicates the difference in the slopes of the two regressions.
• D)has no meaning since (X_i × D_i)= 0 when D_i = 0.

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