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, β₂ A)is the difference in means in Y between the two categories. B)indicates the difference in the intercepts of the two regressions. C)is usually positive. D)indicates the difference in the slopes of the two regressions.

Question

Quizplus · Accepted Answer

β12 represents the effect of the binary variable D on the dependent variable Y, adjusting for X. It indicates how the intercept (the value of Y when X is 0) differs between the two categories defined by D.

In the Regression Model Yi = β0 + β1Xi

In the Regression Model Y_i = β₀ + β₁X_i