Question

23) Which of the following statements about collinearity in a multiple regression model is FALSE? A).Collinearity should be suspected if a model insignificant independent variables that are supposed to be significant based on common sense. B).All independent variables must be considered in determining collinearity in a multiple regression model. C).The Variance Inflation Factor can measure the collinearity of an independent variable. D).Collinearity occurs when some of the independent variables are related. E).Coefficients of independent variables will not be affected by collinearity.

Answer 1

Correct options:

(B). All independent variables must be considered in determining collinearity in a multiple regression model.

(E) Coefficients of independent variables will not be affected by collinearity.

Explanation:

Collinearity should be suspected when we see a negative regression coefficient when dependent variable should increase along with independent variable.

Variance Inflation Factor (VIF) assesses how much the variance of an estimated regression coefficient increases if the independent variables are correlated.

Collinearity occurs when two or more independent variables in a multiple regression model are highly related.