Which of the Following Is True About Multicollinearity

question 23

Multiple Choice

Which of the following is true about multicollinearity?

• A) The effect of a dependent variable on another becomes difficult to isolate.
• B) Regression coefficients become clearer and are easier to interpret.
• C) P-values reduce significantly leading to rejection of null hypothesis.
• D) It is best measured using the statistic variance inflation factor (VIF).

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Definitions:

Depreciation

The systematic allocation of the cost of a tangible asset over its useful life to reflect its decrease in value over time.

Store Equipment

Fixed assets specifically purchased for use in a retail store setting, such as shelving, cash registers, and display units.

Raw Materials

Basic materials that are used in the initial stages of the production process, which will be transformed into finished goods.

Inventory

The goods and materials held by a business for the purpose of sale, manufacturing, or production.