Economics · Econometrics
What are the practical consequences of multicollinearity in the Classical Linear Regression Model (CLRM)? (A) R2, the overall measure of goodness of fit, can be very high. (B) OLS estimators are not BLUE. (C) OLS estimators have small variances and covariances. (D) The t-ratio of one or more coefficients is statistically insignificant. (E) The OLS estimators and their standard errors can be sensitive to small changes in the data. Choose the correct answer from the options given below:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1(B), (D) and (E) only✓
- 2(A), (D) and (E) only
- 3(A), (B) and (D) only
- 4(A), (B) and (C) only
Correct answer
(B), (D) and (E) only
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