In the model y = β₀ + β₁x + β₂d + β₃xd + ε,the dummy variable and the interaction variable cause ____________________________________. A) a change in just the intercept B) a change in just the slope C) a change in both the intercept as well as the slope D) None of these choices is correct.

Question

Quizplus · Accepted Answer

Both the dummy variable and the interaction variable cause a change in both the intercept as well as the slope of the regression equation. The intercept and slope change because the presence of these variables alters the effect of the independent variable on the dependent variable.

In the Model Y = β0 + β1x + β2d

In the Model Y = β₀ + β₁x + β₂d