A regression model displays multicollinearity when ________.
A)the correlation coefficient for dependent variables is 0.7
B)the variance inflation factor is equal to -1.
C)the correlation coefficient for independent variables is 1
D)the variance inflation factor is less than 3

Question

Quizplus · Accepted Answer

Multicollinearity occurs when there is a perfect or near-perfect linear relationship between independent variables. This is represented by a correlation coefficient of 1 (or close to 1). Therefore, choice C is the only option that indicates multicollinearity. The other options are not necessarily indicative of multicollinearity.

A Regression Model Displays Multicollinearity When ________