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MGT 6203 MIDTERM – SOLUTION KEY THEORY QUESTIONS WITH ANSWERS.*Q1) Consider a linear regression model with 2 independent variables (assume both are correlated with the response variable). If we add an interaction term between the independent variables to the model, how will the model be affected:
A) The R2 will increase (or remain the same) with certainty while the adjusted R2 can increase or decrease
B) Both the R2 and adjusted R2 will increase with certainty.
C) The R2 will decrease (or remain the same) with certainty while the adjusted R2 can increase or decrease
D) Both the R2 and adjusted R2 will decrease with certainty.
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