In Estimating a Regression Model with an Instrumental Variable Typically

question 31

Multiple Choice

In estimating a regression model with an instrumental variable typically one of two methods is used to estimate the mode. The two methods are:

• A) two-stage least squares and fixed effects regression.
• B) fixed effects regression and panel data methods.
• C) two-stage least squares and generalized method of moments.
• D) two-stage least squares and within estimator.

---

Definitions:

Ability To Pay

The financial capacity of an individual or entity to meet financial obligations or commitments without incurring undue hardship.

Deferred Tax Liabilities

Taxes that are assessed or incurred but not yet paid, typically resulting from timing differences in recognizing revenue and expenses for tax and accounting purposes.

Taxable Income

The amount of income subject to taxes, calculated by adjusting gross income by various deductions, exemptions, and adjustments specified by tax laws.

Book Income

Book income is a company's financial income as reported in the financial statements, adhering to the rules of accounting, before any tax adjustments.