QUESTION 15

Consider the model: Y = 1 + 2 X 2 + 3 X 3 + where X 2 and X 3 are highly correlated but not perfectly correlated.

We should be concerned with:

A: the certain inability to obtain OLS estimates

B: non-linearity of the model

C: measurement error associated with the dependent variable

D: difficulty in interpreting the meaning of the estimated coefficients