Which of the Following Correlations Would Be an Acceptable Way

question 45

Multiple Choice

Which of the following correlations would be an acceptable way to show that the variable (P_i) is a suitable proxy for A_i in the regression Y_i = β₀ + β₁T_i + β₂A_i + U_i?

• A) Corr(Y_i, T_i) ≠ 0
• B) spCorr(Y_i, T_i (P_i)) ≠ 0
• C) pCorr(Y_i, P_i; T_i) ≠ 0
• D) None of the answers is correct.

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