An Independent Variable X_j Is Considered Highly Correlated with the Other

question 41

Multiple Choice

An independent variable X_j is considered highly correlated with the other independent variables if

• A)VIF_j < 5.
• B)VIF_j > 5.
• C)VIF_j < VIF_i for i ≠ j.
• D)VIF_j > VIF_i for i ≠ j.

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Definitions:

Real GDP

Gross Domestic Product adjusted for inflation, measuring the value of all goods and services produced within a country in real terms.

Taxation

The process by which governments charge fees on individual or corporate income, activities, or products to fund government activities.

Expenditures

The total amount spent on goods and services, including both personal consumption and investment by businesses.

Income

Income is the money received, especially on a regular basis, for work or through investments.