Which of the following are not symptoms of multicollinearity in a regression model. High R² with few…
D and E are the conventional non-warning descriptions. TOLⱼ=1−Rⱼ² and VIFⱼ=1/TOLⱼ; tolerance near one means little explained variation of that regressor by the others. VIF…
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Which of the following are not symptoms of multicollinearity in a regression model.
- High R² with few significant t ratio for coefficients.
- High pair-wise correlations among regressors.
- The closer the Tolerance (TOLⱼ) is to zero.
- Variance Inflation Factor (VIF) of a variable is below 10.
- The closer the Tolerance (TOLⱼ) is to 1.
Answer and explanation
Correct answer B
D and E are the conventional non-warning descriptions. TOLⱼ=1−Rⱼ² and VIFⱼ=1/TOLⱼ; tolerance near one means little explained variation of that regressor by the others. VIF below 10 is below a common severe-collinearity rule of thumb. High overall R² with weak individual t ratios, high pairwise correlations and tolerance near zero are warning symptoms, though none alone is a necessary or sufficient diagnosis.
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UGC NET Economics