Which of the Following Explains Why a 2SLS Model Can

Multiple Choice

Which of the following explains why a 2SLS model can be used to analyze randomized experiments with imperfect compliance?

A) The random assignment (Z) is uncorrelated with the independent variable.
B) The random assignment variable (Z) is correlated with the error term in the outcome equation.
C) The random assignment (Z) is correlated with the independent variable but not with the error term in the outcome equation.
D) The random assignment (Z) causes multicollinearity.