Which of the Following Statements Regarding Multicollinearity Is Not True

question 147

Multiple Choice

Which of the following statements regarding multicollinearity is not true?

• A)It exists in virtually all multiple regression models.
• B)It is also called collinearity and intercorrelation.
• C)It is a condition that exists when the independent variables are highly correlated with the dependent variable.
• D)All of these choices are true.

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Definitions:

Slutsky Substitution Effect

A concept in economics that describes how a change in the price of a good affects consumption patterns, separating the effect into income and substitution effects.

Indifference Curve

A graph that shows different combinations of two goods among which a consumer is indifferent, implying the same level of utility for each combination.

Hicks Version

Refers to John Hicks' adaptation of consumer demand theory, particularly in relation to indifference curves and utility maximization.

Substitution Effect

A modification in buying behavior triggered by a change in goods' comparative prices, prompting people to switch from one product to another.