For a linear regression model with a dummy variable d and an interaction variable xd, we ________.
A) cannot conduct a partial F test for the joint significance of d and xd
B) can conduct a partial F test for the joint significance of d and xd
C) cannot conduct t tests for the individual significance of d and xd
D) can conduct a t test for the joint significance of d and xd

Question

Quizplus · Accepted Answer

In a linear regression model with a dummy variable d and an interaction variable xd, we can conduct a partial F test for the joint significance of d and xd. However, we cannot conduct t-tests for the individual significance of d and xd because when an interaction term is included in the model, the main effects (d in this case) are confounded with the interaction effect (xd*d). Therefore, the t-tests for individual significance may be misleading.

For a Linear Regression Model with a Dummy Variable D