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.

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Definitions:

Protons

Positively charged subatomic particles found in the nucleus of an atom, determining the atomic number of an element.

Electrons

Subatomic particles with a negative charge, orbiting the nucleus of atoms and playing a key role in chemical reactions and electricity.

Proton Acceptor

A chemical entity that receives protons (hydrogen ions) in a chemical reaction, often measured in the context of acid-base chemistry.

Covalent Bond

The chemical bond involving shared pairs of electrons; may be single, double, or triple (with one, two, or three shared pairs of electrons, respectively). Compare with ionic bond and hydrogen bond.