One of the problems resulting from highly correlated indepen

One of the problems resulting from highly correlated independent variables (multicolinearity) is:

Select one:

a. Deflated (low) standard errors on the coefficient estimates.

b. The p-values for the coefficient estimates are deflated (low).

c. The test statistics for the coefficient estimates will be deflated (low).

d. The overall fit of the model (r²) will be negatively affected.

Solution

Answer: c. The test statistics for the coefficient estimates will be deflated (low).