Question

An analyst observes a positive relationship between digital marketing expenses and online sales for a firm. However, she intuitively feels that she should add an additional predictor variable, one which has a high correlation with marketing expenses.

If the analyst adds this independent variable to the model, which of the following could happen? More than one choices could be correct.​

Answer 1

Answer:

The model’s adjusted R-squared could decrease.

Step-by-step explanation:

Answer 2

Answer:

1. The model’s adjusted R-squared could decrease

2. The relationship between marketing expenses and sales can become insignificant

Step-by-step explanation:

For 1

If an insignificant variable is added to the model, value of R-Squared can drop.

For 2

This happens due to tehe concept of multiollinearity.