In a linear regression model, the presence of multicollinearity between the independent variables:
- Does not affect the unbiasedness of the OLS estimators.
- Increases the variance of OLS estimators, leading to less precise coefficient estimates.
- Can make it difficult to determine the individual effect of each independent variable on the dependent variable.
Which of the following options is correct?
1
Only statements 1 and 2 are correct
2
Only statements 2 and 3 are correct
3
Only statements 1 and 3 are correct
4
All statements 1, 2, and 3 are correct
5
Question Not Attempted