Which of the following problems is not caused by multicollinearity?
A)It is difficult or even impossible to interpret the estimates of the regression coefficients.
B)Inordinately small t values for the regression coefficients may result
C)The standard deviations of the regression coefficients are underestimated
D)The algebraic sign of estimated regression coefficients may be the opposite of what would be expected for a predictor variable.
E)The variance of a given regression coefficient is larger than it would otherwise have been if the variable had been completely uncorrelated with all the other variables in the model.

Question

Quizplus · Accepted Answer

Multicollinearity typically leads to inflated standard errors for the regression coefficients, not underestimated ones. This means that the variance of the regression coefficients is larger, not smaller, due to the presence of multicollinearity.

Which of the Following Problems Is Not Caused by Multicollinearity