Question: Including a dummy variable (D) that is multiplied by another explanatory variable (X) means that the regression lines will have different slopes, but the same




Including a dummy variable (D) that is multiplied by another explanatory variable (X) means that the regression lines will have different slopes, but the same Y-intercept, when plotting Y against X, assuming that the slope coefficient on D*X is statistically significant. O True O FalseSuppose you have 3 categories of cars: LARGE, SMALL and MEDIUM. You create one variable (SIZE) that takes values of 0 (SMALL), 1 (MEDIUM) AND 2 (LARGE). You want to use the size information, together with the WEIGHT of a car to determine the car's fuel efficiency as measured in miles-per-gallon (MPG). If you regress MPG on WEIGHT and SIZE, you will not be able to determine accurately whether different sized cars have different MPG based on their size category, because the regression will force three equally-spaced lines. O True O False
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