Consider the Following Simple Regression Model Y = ₀

question 21

Multiple Choice

Consider the following simple regression model y = ₀ + ₁x₁ + u. Suppose z is an instrument for x. Which of the following statements is true?

• A)The condition Cov(z,u) = 0 can be tested statistically.
• B)The condition Cov(z,x) 0 cannot be tested statistically.
• C)The instrumental variables estimator is always biased if Cov(x,u) 0.
• D)The ordinary least squares estimator is unbiased if Cov(x,u) 0 .

---

Definitions:

Cystoscopy

A medical procedure that allows a doctor to examine the lining of the bladder and the urethra using a cystoscope.

Kidney Transplantation

A surgical procedure where a healthy kidney from a donor is placed into a patient with kidney failure.

Biopsy

A medical test that involves extraction of sample cells or tissues from the body to be examined more closely under a microscope, usually to assess the presence or extent of disease.