Which of the following statements best defines the term 'multicollinearity'?
A) When two predictors have a combined correlation coefficient of 1
B) When there are strong correlations between two or more predictors in a regression model*
C) When one predictor is a perfect linear combination of the other predictors
D) None of the above

Question

Quizplus · Accepted Answer

Multicollinearity occurs when there are strong correlations between two or more predictors in a regression model. This can cause issues with interpreting the individual effects of the predictors and can make it difficult to determine which predictors are truly important in the model. Option A describes a scenario of perfect collinearity, which is a specific type of multicollinearity. Option C describes a scenario of perfect multicollinearity, which is when one predictor is a perfect linear combination of the other predictors.

Which of the Following Statements Best Defines the Term 'Multicollinearity