Multiple Choice
In a case where there is multicollinearity in the model
A) Independent variables have strong linear relationships with each other
B) The variance of the estimates increases when we have multicollinearity.
C) Multicollinearity will lead to bias.
D) Both A and B
E) Both A and C
Correct Answer:
Verified
Correct Answer:
Verified
Q2: Measurement error in the dependent variable causes
Q3: Adding more independent variables can reduce multicollinearity.
Q4: What should we do when we have
Q5: By adding more independent variables into our
Q6: Explain the challenges in the model specification
Q8: Perfect multicollinearity means all independent variables are
Q9: Explain the omitted variable bias problem, and
Q10: Which of the following are consequences of
Q11: When using an auxiliary equation to
Q12: Adding more control variables will always increase