The binary variable interaction regression
A) can only be applied when there are two binary variables, but not three or more.
B) is the same as testing for differences in means.
C) cannot be used with logarithmic regression functions because ln(0) is not defined.
D) allows the effect of changing one of the binary independent variables to depend on the value of the other binary variable.
Ans: D) allows the effect of changing one of the binary independent variables to depend on the value of the other binary variable.
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According to the marginal productivity theory of income
A) the income received by an individual who supplies labor services equals the incremental benefit generated to the firm by that individual's labor. B) the average income received by an individual who supplies resources is influenced by the resources owner's marginal productivity. C) the greater the quantity of resources owned by an individual, the greater his incentive to increase productivity and his income. D) the income received by an individual who supplies labor services equals the profit generated to the firm by that individual's labor.
Refer to Figure 27-3. In the graph above, suppose the economy is initially at point A. The movement of the economy to point B as shown in the graph illustrates the effect of which of the following policy actions by Congress and the president?
A) a decrease in government purchases B) a decrease in income taxes C) a decrease in interest rates D) an increase in the money supply