Instrumental Variables Regression Uses Instruments to

question 36

Multiple Choice

Instrumental Variables regression uses instruments to

• A)establish the Mozart Effect.
• B)increase the regression R2.
• C)eliminate serial correlation.
• D)isolate movements in X that are uncorrelated with u.

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Definitions:

Primary Industry

The sector of the economy that extracts and harvests natural resources directly from the Earth, such as agriculture, mining, and forestry.

Normal Goods

Goods for which demand increases as the income of the buyer increases, and vice versa.

Income Increase

A rise in the amount of money received, especially on a regular basis, through work or investments.

Substitute

A product or service that can be used in place of another to satisfy the same want or need.