The Rule-Of-Thumb for Checking for Weak Instruments Is as Follows

question 6

Multiple Choice

The rule-of-thumb for checking for weak instruments is as follows: for the case of a single endogenous regressor,

• A)a first stage F must be statistically significant to indicate a strong instrument.
• B)a first stage F > 1.96 indicates that the instruments are weak.
• C)the t-statistic on each of the instruments must exceed at least 1.64.
• D)a first stage F < 10 indicates that the instruments are weak.

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Definitions:

Effective Rate

The actual interest rate an investor receives after the effects of compounding interest are taken into account.

Compounding Interval

The period of time at the end of which interest is added to the principal balance of an investment or loan.

Interest

The charge for borrowing money or the return on invested capital, generally expressed as a percentage rate.

Furniture

Movable objects intended to support various human activities such as seating, eating, and sleeping, as well as to hold objects or store items.