When does multicollinearity occur in a multiple regression analysis?
A) The dependent variables are highly correlated.
B) The regression coefficients are correlated.
C) The independent variables are highly correlated.
D) The independent variables have no correlation.

Question

Quizplus · Accepted Answer

Multicollinearity occurs when the independent variables in a multiple regression analysis are highly correlated with each other. This makes it difficult to determine the true relationship between each independent variable and the dependent variable, as the effect of one independent variable cannot be separated from that of another. Highly correlated independent variables can also result in unstable or inconsistent regression coefficients. Therefore, having highly correlated independent variables can be problematic and should be avoided whenever possible.

When Does Multicollinearity Occur in a Multiple Regression Analysis