Question

Which of the following statements are correct? I. The fact that a coefficient is statistically significant...

Which of the following statements are correct?

I. The fact that a coefficient is statistically significant necessarily means it is economically significant as well.

II. Multicollinearity is a violation of No perfect collinearity assumption. (MLR.3)

a. Only I

b. Only II

c. Both I and II

d. Neither I nor II

Homework Answers

Answer #1

If the data is precisely estimated then the Statistically significant coefficient has be to Economically significant

Economically significant Economically insignificant
Precisely estimated Statistically significant May be statistically significant
Imprecisely estimated May be statistically insignificant Statistically insignificant

Multicollinearity is a problem of correlation among the independent variable

I. The fact that a coefficient is statistically significant necessarily means it is economically significant as well.

II. Multicollinearity is a violation of No perfect collinearity assumption.

c. Both I and II correct

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