Which statement(s) is/are true?

I. Once a categorical variable has been recoded as a dummy variable, the dummy variable can be used in regression analysis just like any other quantitative variable.
II. The main purpose of dummy variables is that they are tools that allow us to represent nominal-level independent variables in statistical techniques like regression analysis.

Correct Answer: Both are true.

In such a model, the interpretation of the intercept is the predicted value of the indepdent variable if the indicator variable is 0, and when the indicator variable is 1, the slope is the difference in the means if we grouped the observations by the indicator variable.