The Following Equations Represent a Simultaneous Equations Model: K₁ =

question 24

Multiple Choice

The following equations represent a simultaneous equations model: K₁ = ₁K₂ + ₁z₁ + u₁
K₂ = ₂K₁+ ₂z₂ + u₂
The reduced form equation for K₂ will express:

• A)K₁ as a function of K₂ and the error terms.
• B)K₂ as a function of K₁and the error terms.
• C)K₂ as a function of exogenous variables and the error terms.
• D)K₁ as a function of exogenous variables, the error terms, and K₂.

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