Which of the Following Problems Would Lead an Economist to Use

question 3

Multiple Choice

Which of the following problems would lead an economist to use instrument variable methods?

• A)The dependent variable has an impact on the independent variable.
• B)There are too few quarters of data.
• C)There are too many independent variables.
• D)The R² is too high.
• E) The residuals are too small.

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Definitions:

Rank-Order Consistency

Comparing someone to the average person his or her age.

Variability

The degree to which data points differ from each other or the mean in a dataset, indicating the spread or dispersion of the dataset.

Maturation Of Personality

Growth in traits consistent with being more mature and grown-up, such as higher conscientiousness, higher agreeableness, and lower neuroticism.

Neuroticism

A personality trait characterized by tendencies toward anxiety, depression, anger, and emotional instability.