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In theory, the Variance Inflation Factor (VIF) for a variable: is infinitely large (in the limit)...

In theory, the Variance Inflation Factor (VIF) for a variable:

is infinitely large (in the limit) if it is statistically independent from the other independent variables

equals zero if it is a linear combination of the other independent variables

equals zero if it is statistically independent from all the other variables

equals one if it is statistically independent from all the other variables

equals one if it is a linear combination of the other independent variables

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Answer #1

Option "c"is correct i.e equals one if it is statistically independent from all the other variables

Explanation

VIF =1/ 1-Ri2

If all the statistically independent variables are orthogonal to each other, then VIF = 1.0. If there is perfect correlation(linear relation) , then VIF = infinity. A higher value of VIF indicates that there is a correlation between the variables. If the VIF is 4, this means that the variance of the model coefficient is inflated by a factor of 4 due to the presence of multicollinearity in the model

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