The Following Equations Represent a Simultaneous Equations Model: K₁ =

question 11

Multiple Choice

The following equations represent a simultaneous equations model: K₁ = α₁K₂ + β₁z₁ + u₁
K₂ = α₂K₁ + β₂z₂ + u₂
The reduced form equation for K₂ will express:

• A)K₁ as a function of K₂ and the error terms.
• B)K₂ as a function of K₁ and the error terms.
• C)K₂ as a function of exogenous variables and the error terms.
• D)K₁ as a function of exogenous variables,the error terms,and K₂.