If an independent variable in a multiple linear regression model is an exact linear combination of other independent variables, the model suffers from the problem of _____.
A)perfect collinearity
B)homoskedasticity
C)heteroskedasticty
D)omitted variable bias

Question

Quizplus · Accepted Answer

Perfect collinearity occurs when one or more independent variables in a multiple linear regression model are an exact linear combination of other independent variables. This causes the model to lack a unique solution, making it impossible to estimate the effects of individual independent variables on the dependent variable. Therefore, the correct answer is A. Homoskedasticity, heteroskedasticity, and omitted variable bias are separate issues that can affect the accuracy of a multiple linear regression model, but they are not directly related to perfect collinearity.

If an Independent Variable in a Multiple Linear Regression Model