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All of the Following Conditions Are Necessary for an Instrumental

Question 19

Multiple Choice

All of the following conditions are necessary for an instrumental variable Z to be a valid instrument for X in the regression: Yi = β0 + β1Xi + Ui except for which condition?


A) Cov(Xi, Zi) ≠ 0
B) Cov(Zi, Ui) = 0
C) Cov(Xi, Yi) ≠ 0
D) None of these choices are correct.

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