When There Is a Single Instrument and Single Regressor, the TSLS

question 13

Multiple Choice

When there is a single instrument and single regressor, the TSLS estimator for the slope can be calculated as follows:

• A) \(\hat { \beta } _ { 1 } ^ { \text {TSLS } } = \frac { S _ { Z Y } } { S _ { Z x } }\)
• B) \(\hat { \beta } _ { 1 } ^ { \text {TSLS } } = \frac { S _ { X Y } } { S _ { X } ^ { 2 } }\)
• C) \(\hat { \beta } _ { 1 } ^ { \text {TSLS } } = \frac { S _ { Z X } } { S _ { Z Y } }\)
• D) \(\hat { \beta } _ { 1 } ^ { \text {TSLS} } = \frac { S _ { Z Y } } { S _ { Z } ^ { 2 } }\)

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Definitions:

Cash Flows

The net amount of cash being transferred into and out of a business, illustrating its ability to generate and use cash.

Incremental Analysis

An examination of the additional benefits and costs of certain business decisions.

Fixed Overhead

Regular, unchanged costs incurred by a business in its operation, such as rent, salaries, and utilities, which do not vary with the level of production or sales.

Direct Materials

Raw materials used in the production of goods that are directly associated with the finished product.