In the Regression Model Yi = β0 + β1Xi

question 52

Multiple Choice

In the regression model Yi = β0 + β1Xi + β2Di + β3(Xi × Di) + ui,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 (Xi × Di)= 0 when Di = 0.

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