In the regression model Yi = ?0 + ?1Xi + ?2Di + ?3(Xi × Di) + ui, where X is a continuous variable and D is a binary variable, ?2
A) is the difference in means in Y between the two categories.
B) indicates the difference in the intercepts of the two regressions.
C) is usually positive.
D) indicates the difference in the slopes of the two regressions.
Answer: B
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When government outlays are less than tax revenues, the government has
A) a budget with a negative debt. B) a budget deficit. C) a budget with a positive balance. D) an illegal budget because outlays must exceed tax revenues. E) a budget surplus.
As products become more differentiated:
A. consumers are less willing to switch in response to price changes and competition becomes more intense. B. consumers are more willing to switch in response to price changes and competition becomes more intense. C. consumers are less willing to switch in response to price changes and competition becomes less intense. D. consumers are more willing to switch in response to price changes and competition becomes less intense.
With respect to the Keynesian liquidity trap, at very low levels of income, equilibrium in the money market occurs at points along the flat portion of the money demand schedule where
a. the elasticity of money demand is extremely high. b. money demand is associated with a low interest elasticity. c. money demand is completely interest inelastic. d. None of the above
If the balance on the current account is zero, which of the following transactions will cause it to go into deficit?
a. The Moscow Capital Investment Corporation makes a loan to a US firm b. A US subsidiary exports raw materials to its French parent company c. US firms and individuals receive dividends on US investments in Latin America d. US tourists in Great Britain purchase pounds sterling e. Foreigners purchase US securities