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Which of the Following Would You Expect to Be a Problem

Question 6

Multiple Choice

Which of the following would you expect to be a problem associated with adding lagged values of the dependent variable into a regression equation?


A) The assumption that the regressors are non-stochastic is violated
B) A model with many lags may lead to residual non-normality
C) Adding lags may induce multicollinearity with current values of variables
D) The standard errors of the coefficients will fall as a result of adding more explanatory variables

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