Two-Stage Least Squares Can Be Used to

question 10

Multiple Choice

Two-stage least squares can be used to

• A)account for the time-invariant component of the error term.
• B)control for heteroskedasticity.
• C)control for measurement error in a dependent variable.
• D)control for the endogeneity of independent variable.

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Definitions:

Point Estimate

A single value that serves as an estimate of a population parameter.

Regression Analysis

A statistical method for estimating the relationships among variables, including a dependent variable and one or more independent variables.

Least Squares Line

A straight line that minimizes the sum of the squared differences between observed values and the values predicted by the line.

Increase In Sales

A measure indicating the growth in revenue generated from goods sold or services provided over a specific period.