If X2 is a binary predictor in Y = β0 + β1X1 + β2X2,then which statement is most nearly correct?
A)X2 = 1 should represent the most desirable condition.
B)X2 would be a significant predictor if β2 = 423.72.
C)X2 = 0,X2 = 1,X2 = 2 would be appropriate if three categories exist.
D)X2 will shift the estimated equation either by 0 units or by β2 units.

Question

Quizplus · Accepted Answer

Since X2 is a binary predictor, it can only take on two values (0 and 1). Therefore, the addition of X2 to the model will result in two separate estimated equations, one when X2 = 0 and one when X2 = 1. These equations will differ only in the intercept term. As a result, X2 will shift the estimated equation either by 0 units (when X2 = 0) or by β2 units (when X2 = 1). Therefore, option D is the most correct statement.

If X2 Is a Binary Predictor in Y = β0