Estimation of the IV Regression Model

question 1

Multiple Choice

Estimation of the IV regression model

• A)requires exact identification.
• B)allows only one endogenous regressor, which is typically correlated with the error term.
• C)requires exact identification or overidentification.
• D)is only possible if the number of instruments is the same as the number of regressors.

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Definitions:

Consumers

Individuals or groups who use goods and services produced within an economy.

Producers

Producers are individuals or entities that create goods or services for sale or exchange, typically within an economy.

Purchasing Power Parity

An economic theory that compares different countries' currencies through a "basket of goods" approach to determine exchange rate effects on goods' prices.

Exchange Rate

The value of one currency for the purpose of conversion to another, indicating how much of one currency can be exchanged for one unit of another currency.