Consider the Following Simple Regression Model Y=β₀+ β₁x₁+ U

question 10

Multiple Choice

Consider the following simple regression model y=β₀+ β₁x₁+ u.Suppose z is an instrument for x.Which of the following conditions denotes instrument relevance?

• A)Cov(z,u)> 0
• B)Cov(z,u)< 0
• C)Cov(z,x)≠ 0
• D)Cov(z,x)=0