Lecture 4

Question 1

What is multicollinearity?

a. When predictor variables have a linear relationship with the outcome variable
b. When predictor variables correlate very highly with each other
c. When predictor variables are correlated with variables not in the regression model
d. When predictor variables are independent

Answer 1

b. When predictor variables correlate very highly with each other

Question 2

Which of the following statements about the t-statistic in regression is not true?

a. The t-statistic is equal to the regression coefficient divided by its standard deviation
b. The t-statistic tests whether the regression coefficient, b, is significantly different from 0
c. The t-statistic provides some idea of how well a predictor predicts the outcome variable
d. The t-statistic can be used to see whether a predictor variables makes a statistically significant contribution to the regression model

Answer 2

a. The t-statistic is equal to the regression coefficient divided by its standard deviation

t stats = B/SEB