You can limit the problem of potential spurious correlation by
A)estimating the regression both with and without the suspect independent variable and comparing the R-squared for the two regressions.
B)thinking carefully about the chose model specification to rule out potential spurious correlations.
C)including interaction terms between the suspect independent variable and the remaining independent variables and testing for the joint significance of those terms.
D)including a dummy variable for the suspect independent variable and testing for the individual significance of that term.

Question

Quizplus · Accepted Answer

Thinking carefully about the chosen model specification is the best way to limit the problem of potential spurious correlation. This involves ensuring that the independent variables included in the regression are theoretically sound, and that any potential confounding variables are taken into account. Estimating the regression both with and without the suspect independent variable (A), including interaction terms (C), and including a dummy variable (D) can also help control for spurious correlations, but they are not as effective as choosing an appropriate model specification.

You Can Limit the Problem of Potential Spurious Correlation by