Endogeneity of an Independent Variable Occurs When

question 14

Multiple Choice

Endogeneity of an independent variable occurs when

• A)an independent variable is correlated with the dependent variable.
• B)an independent variable is correlated with the error term.
• C)the dependent variable is correlated with the error term.
• D)the dependent variable is correlated with an independent variable.

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Definitions:

Standard Deviation

A measure of the amount of variation or dispersion of a set of values, indicating how much the values deviate from the mean of the set.

Forecast Error

The difference between the actual outcomes and the predictions made by forecasting models.

Expected Profit

The projected earnings calculated by assessing potential revenues minus anticipated costs.

Product Availability

The extent to which products are in stock and accessible for purchase by customers, directly impacting sales and customer satisfaction.