A loan officer is interested in examining the determinants of the total dollar value of residential loans made during a month. She used Y = β 0 + β 1 X 1 + β 2 X 2 + β 3 X 3 + β 4 X 4 + ε to model the relationship, where Y is the total dollar value of residential loans in a month (in millions of dollars), X 1 is the number of loans, X 2 is the interest rate, X 3 is the dollar value of expenditures of the bank on advertising (in thousands of dollars), and X 4 is a dummy variable equal to 1 if the observation is either June, July, or August.
Suppose that she obtained = 3.8 + 0.23 x 1 - 1.31 x 2 + 0.032 x 3 + 1.05 x 4 by using data from the past 24 months. How would we interpret the coefficient on x 4 ?

Question

A loan officer is interested in examining the determinants of the total dollar value of residential loans made during a month. She used  Y  =  β 0   +  β 1 X 1   +  β 2 X 2   +  β 3 X 3   +  β 4 X 4   + ε to model the relationship, where  Y  is the total dollar value of residential loans in a month (in millions of dollars),  X 1   is the number of loans,  X 2   is the interest rate,  X 3   is the dollar value of expenditures of the bank on advertising (in thousands of dollars), and  X 4   is a dummy variable equal to 1 if the observation is either June, July, or August. 
    Suppose that she obtained     = 3.8 + 0.23 x 1   - 1.31 x 2   + 0.032 x 3   + 1.05 x 4   by using data from the past 24 months. How would we interpret the coefficient on  x 4 ?

Answer

On an average, we would expect an additional 1.05 loans per month during June, July, and August.

Answer

There is no difference in the total residential loan amount between the months of June and September.

Answer

On an average, we would expect an additional 1.05% increase in loans during June, July, and August.

Answer

On an average, we would expect an additional $1.05 million in loans during June, July, and August.

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A loan officer is interested in examining the determinants of the total dollar v...

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