Spurious regression occurs
A)an unexpected shift in time-series data.
B)a number of outliers in cross-section data.
C)a general upward trend over time in time-series data.
D)an independent variable is correlated with the dependent variable but there is no theoretical justification for the relationship.

Question

Quizplus · Accepted Answer

Spurious regression occurs when an independent variable in a regression model is correlated with the dependent variable, but there is no theoretical justification for the relationship, leading to misleading results. This often occurs when dealing with time-series data, where variables may appear to be related due to a shared upward trend or other factors, even if there is no true causal relationship between them.

Spurious Regression Occurs