Which of the following statements in statistical terminology is equivalent to the statement: "There is no exact linear relationship among the explanatory variables"?
A) The error term is homoscedastic.
B) There is no endogeneity.
C) There is no autocorrelation.
D) There is no perfect multicollinearity.

Question

Quizplus · Accepted Answer

"There is no exact linear relationship among the explanatory variables" is another way of saying that there is no perfect multicollinearity. Perfect multicollinearity occurs when two or more explanatory variables are perfectly linearly related to each other, which can cause issues in regression analysis. The other answer choices (homoscedasticity, endogeneity, and autocorrelation) do not relate to the presence or absence of a linear relationship among explanatory variables.

Which of the Following Statements in Statistical Terminology Is Equivalent