You Have to Worry About Perfect Multicollinearity in the Multiple

question 20

Multiple Choice

You have to worry about perfect multicollinearity in the multiple regression model because

• A)many economic variables are perfectly correlated.
• B)the OLS estimator is no longer BLUE.
• C)the OLS estimator cannot be computed in this situation.
• D)in real life, economic variables change together all the time.

---

Definitions:

Exponentiation

The mathematical operation involving the raising of one number to the power of another.

Division

A mathematics operation where a number is divided into parts or segments, represented by the division sign (/ or ÷).

Division

A fundamental mathematical operation that represents the process of dividing one number by another.

Exponentiation

A mathematical operation involving the raising of a base to the power of an exponent, symbolizing repeated multiplication.