Exclusion Restrictions Are Said to Be Imposed in a Two-Equation

question 2

Multiple Choice

Exclusion restrictions are said to be imposed in a two-equation simultaneous equations model if it is assumed that:

• A)certain exogenous variables do not appear in the first equation and others are absent from the second equation.
• B)certain endogenous variables do not appear in the first equation and others are absent from the second equation.
• C)the error terms in each equation is uncorrelated with the exogenous variables.
• D)the error terms in each equation is correlated with the exogenous variables.

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Definitions:

Charles Perrow

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