In the Model Y_t = ₀ + ₁x_t1

question 8

Multiple Choice

In the model y_t = ₀ + ₁x_t1 + ₂x_t2 + ….. + _kx_tk + u_t, the explanatory variables, x_t = (x_t1, x_t2 …., x_tk) , are sequentially exogenous if:

• A)E(u_t|xt , xt-₁, ……) = E(u_t) = 0, t = 1,2, ….
• B)E(u_t|xt , xt-₁, ……) E(u_t) = 0, t = 1,2, ….
• C) E(u_t|xt , xt-₁, ……) = E(u_t) > 0, t = 1,2, ….
• D) E(u_t|xt , xt-₁, ……) = E(u_t) = 1, t = 1,2, ….

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Definitions:

Ordinary Income

Income earned from providing services, including wages, salaries, tips, and commissions, as well as income from investments that are not considered capital gains.

Nondeductible Items

Expenses or items that cannot be subtracted from gross income to reduce taxable income according to tax laws.

Partnership Interest

An ownership share in a partnership that entitles the holder to a portion of the entity's profits and losses.

FMV

Fair Market Value, the price at which property would sell on the open market between a willing buyer and a willing seller.