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.

Question

Quizplus · Accepted Answer

The coefficient β3 represents the difference in slopes between the two regression lines when D=1 and D=0.

In the Regression Model Yi = β0 + β1Xi