Consider the Multiple Regression Model with Two Regressors X1 and X2,where

question 55

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 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

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