Consider the Multiple Regression Model with Two Regressors X₁ and X₂

question 53

Multiple Choice

Consider the multiple regression model with two regressors X₁ and X₂, where both variables are determinants of the dependent variable. You first regress Y on X₁ only and find no relationship. However when regressing Y on X₁ and X₂, the slope coefficient $\widehat { \beta 1 }$ changes by a large amount. This suggests that your first regression suffers from

• A)heteroskedasticity
• B)perfect multicollinearity
• C)omitted variable bias
• D)dummy variable trap

---

Definitions:

Clarification

The act of rendering a statement or scenario more clear and understandable.

Emotional Intelligence

The ability to form work relationships with colleagues, display maturity in a variety of situations, manage emotions, consider the emotions of others, and resolve conflicts by interacting with colleagues constructively to achieve a positive outcome.

Work Relationships

Interactions and bonds formed between colleagues in a professional setting.

Manage Emotions

The ability to understand, control, and express one's emotions in a healthy and productive manner.