The fitted values from a multivariate regression Y₀= β₀+ β₁X_i+ β₂Dummy will be A) Two parallel lines with a slope of β₂ and separated by β₁. B) Two parallel lines with a slope of β₁ and separated by B₂. C) Two lines with differing slopes separated by β₁ D) Two lines with differing slopes separated by β₂

Question

Quizplus · Accepted Answer

The fitted values from a multivariate regression with a dummy variable will result in two parallel lines if the dummy variable only shifts the intercept and not the slope. The slope of both lines will be determined by β1 (β₁ in the notation provided), and the separation between the two lines will be determined by the coefficient of the dummy variable, β2 (B₂ in the notation provided), which affects the intercept.

The Fitted Values from a Multivariate Regression Y0 = β0

The Fitted Values from a Multivariate Regression Y₀= β₀