Mastering Multicollinearity
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Questions and Answers

Which of the following best describes multicollinearity?

  • A situation where there is a strong negative relationship between two or more independent variables
  • A situation where there is a strong positive relationship between two or more independent variables
  • A situation where there is a perfect linear relationship between two or more independent variables (correct)
  • A situation where there is no relationship between two or more independent variables

    • What is the impact of multicollinearity on regression analysis?

  • It inflates the standard errors of the regression coefficients (correct)
  • It makes the regression coefficients more accurate
  • It has no impact on the standard errors of the regression coefficients
  • It reduces the standard errors of the regression coefficients

    • How can multicollinearity be detected in regression analysis?

  • By examining the residuals of the regression model
  • By examining the correlation matrix of the dependent variable
  • By examining the correlation matrix of the independent variables (correct)
  • By examining the p-values of the regression coefficients

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