Multiple Choice
What should we do when we have multicollinearity?
A) Ignore it no matter what.
B) Drop some of the independent variables.
C) Consider testing whether the highly collinear variables are jointly significant.
D) Add more independent variables in order to reduce multicollinearity.
Correct Answer:
Verified
Correct Answer:
Verified
Q11: Explain the omitted variable bias problem, and
Q12: Adding more control variables will always increase
Q13: Which of the following are associated with
Q14: We necessarily do not have an omitted
Q15: Adding more independent variables can reduce multicollinearity.
Q17: Explain the challenges in the model specification
Q18: Measurement error in the dependent variable causes
Q19: Which of the following are consequences of
Q20: In a case where there is multicollinearity
Q21: Adding more independent variables into the model