An Instrumental Variable Is a Variable That Is Correlated

question 12

Multiple Choice

An instrumental variable is a variable that is correlated

• A)with the endogenous right hand side variable but not correlated with the error term.
• B)with the error term but not correlated with the endogenous right hand side variable.
• C)with both the error term and the endogenous right hand side variable.
• D)with both the endogenous right hand side variable and with another independent variable.

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Definitions:

Adjusting Journal Entry

Adjustments made in the financial books at the period's end to accurately distribute profits and costs to the period they belong.

Net Income

The amount of money that remains after all operating expenses, interest, taxes, and preferred stock dividends have been deducted from a company's total revenue.

Assets

Resources owned or controlled by a business that are expected to produce future economic benefits.

Prepaid Rent

An asset account showing the amount of rent payments made ahead of time, indicating rent that has been paid but not yet incurred.