For the model y = β₀+ β₁x + β₂d + β₃xd+ε, in which d is a dummy variable, we cannot perform the F test for the joint significance of the dummy variable d and the interaction variable xd.

Question

Quizplus · Accepted Answer

The F test can be used to test the joint significance of the dummy variable $d$ and the interaction term $xd$ by comparing a model including these terms against a restricted model without them, to see if they significantly improve the model's explanatory power.

For the Model Y = β0 + β1x + β2d

For the Model Y = β₀+ β₁x + β₂d