What Condition Best Describes the Endogeneity Problem

question 43

Multiple Choice

What condition best describes the endogeneity problem?

• A) The variance of the errors (U_i) depends on X_i.
• B) Some variables within X_i are perfectly correlated with other variables in X_i.
• C) The distribution of the errors (U_i) is non-normal.
• D) One of the X_i variables is correlated with the error term (U_i).

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