Economics

Suppose the interaction assessment stage for the model of Example 3 finds the following two-factor product terms to be significant: HT X CT and HT X SEX; the other two-factor product terms are not significant and are removed from the model. Using the hierarchy principle, what variables must be retained in all further models considered. Can these (latter) variables be tested for significance? Explain briefly.

Based on the results in Exercise 9, state the (reduced) model that is left at the end of the interaction assessment stage.