Question

Using 20 observations, the following regression output is obtained from estimating y = β₀ + β₁x + β₂d + β₃xd + ε.

	Coefficients	Standard Error	t Stat	p-value
Intercept	16.32	3.20	5.10	0.000
x	5.59	0.50	11.18	0.000
d	−5.61	5.50	−1.02	0.323
xd	3.51	0.54	6.50	0.000

a. Compute yˆy^ for x = 12 and d = 1; then compute yˆy^ for x = 12 and d = 0. (Round intermediate calculations to at least 4 decimal places and final answers to 2 decimal places.)

b-1. Is the dummy variable d significant at the 5% level?

multiple choice 1

• Yes, since we reject the relevant null hypothesis.

• Yes, since we do not reject the relevant null hypothesis.

• No, since we reject the relevant null hypothesis.

• No, since we do not reject the relevant null hypothesis.

b-2. Is the interaction variable xd significant at the 5% level?

multiple choice 2

• Yes, since we reject the relevant null hypothesis.

• Yes, since we do not reject the relevant null hypothesis.

• No, since we reject the relevant null hypothesis.

• No, since we do not reject the relevant null hypothesis.

Answer 1