When might imperfect multicollinearity not require the collecting of more data to remedy the likely imprecise estimates of the affected variables?
A) When the model suffers from heteroscedasticity as well
B) When you are only conducting hypothesis tests
C) When the imperfect multicollinearity is confined to control variables only
D) When the treatment effect is positive

Question

Quizplus · Accepted Answer

If the imperfect multicollinearity is confined to control variables only, then the estimates of the main variables of interest may still be reasonably precise. In this case, collecting more data may not be necessary to remedy the likely imprecise estimates of the affected variables. However, if the imperfect multicollinearity affects the variables of interest, then collecting more data or re-specifying the model would be necessary. Choice A is incorrect because heteroscedasticity requires different remedies. Choice B is incorrect because it does not address the issue of imprecise estimates. Choice D is irrelevant to the issue of multicollinearity.

When Might Imperfect Multicollinearity Not Require the Collecting of More