Why Is Multicollinearity a Potential Problem in a Multiple Linear

question 7

Multiple Choice

Why is multicollinearity a potential problem in a multiple linear regression?

• A)It becomes difficult to assess the individual importance of predictors and it decreases the standard errors of the b coefficients making them redundant.
• B)It becomes difficult to assess the individual importance of predictors and it increases the standard errors of the b coefficients making them unreliable.
• C)It becomes difficult to assess the collective power of predictors as it increases the levels of error in the model.
• D)It becomes too easy to assess the individual importance of predictors, making the b coefficients unreliable.

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Definitions:

War of 1812

A military conflict between the United States and the United Kingdom and its allies, lasting from 1812 to 1815, largely over issues of trade and maritime rights.

Treaty of Greenville

A 1795 agreement between the United States and various Native American tribes which established a boundary line and aimed to end hostilities and secure rights to settlement.

British Blockaded

Refers to historical instances where British naval forces imposed a blockade on enemy ports to restrict and control maritime traffic and goods.

Embargo Act

Legislation enacted by the U.S. Congress in 1807 prohibiting American ships from trading in all foreign ports, in response to British and French restrictions on U.S. trade.