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.
Ans: C) indicates the difference in the slopes of the two regressions.
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