Refer to the Simultaneous Equations Model Above

question 20

Multiple Choice

Refer to the simultaneous equations model above.The reduced form error from the reduced form equation for K₂ will be a:

• A)quadratic function of u₁ and u₂?,and correlated with z_1? and z₂.
• B)quadratic function of u₁ and u₂?,and uncorrelated with z_1? and z₂.
• C)linear function of u₁ and u₂?,and correlated with z_1? and z₂.
• D)linear function of u₁ and u₂?,and uncorrelated with z_1? and z₂.

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