Imperfect multicollinearity is when:
A) two or more independent variables have nearly an exact linear relationship.
B) two independent variables are nearly orthogonal.
C) the r-squared coefficient is nearly zero.
D) the coefficients on two independent variables are nearly equal.

Question

Quizplus · Accepted Answer

Imperfect multicollinearity occurs when two or more independent variables have a high degree of correlation, but not an exact linear relationship. If the variables had an exact linear relationship, it would be perfect multicollinearity. Imperfect multicollinearity can still cause issues with interpreting coefficient estimates and can lead to unstable and unreliable regression models.

Imperfect Multicollinearity Is When