The problem of multicollinearity arises when the:
A)dependent variables are highly correlated with one another.
B)independent variables are highly correlated with one another.
C)independent variables are highly correlated with the dependent variable.
D)dependent variables are highly correlated with one another or independent variables are highly correlated with one another..

Question

Quizplus · Accepted Answer

Multicollinearity occurs when independent variables are highly correlated with one another, which can lead to inaccurate estimates of the coefficients and a loss of statistical significance in the model. This is because it becomes difficult to determine the separate effects of each independent variable on the dependent variable when they are so highly correlated with one another. Therefore, it is important to check for and address multicollinearity in regression analysis.

The Problem of Multicollinearity Arises When The