In the Case of Exact Identification

question 39

Multiple Choice

In the case of exact identification

• A)you can use the J-statistic in a test of overidentifying restrictions.
• B)you cannot use TSLS for estimation purposes.
• C)you must rely on your personal knowledge of the empirical problem at hand to assess whether the instruments are exogenous.
• D)OLS and TSLS yield the same estimate.

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Definitions:

Doubtful Accounts

Doubtful accounts represent receivables that a company is uncertain to collect, typically categorized separately to reflect potential losses.

Cash Discount

A reduction in the invoice amount by the seller if the buyer pays their bill within a specified time frame, incentivizing prompt payment.

Retail Customers

Individuals who purchase goods and services for personal use from retailers, as opposed to wholesale customers.

Financing Charge

Interest or fees paid by a borrower for the use of credit or the extension of existing credit.