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The Following Equations Represent a Simultaneous Equations Model: K1 =

Question 7

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The following equations represent a simultaneous equations model: K1 = The following equations represent a simultaneous equations model: K<sub>1</sub> = <sub>1</sub>K<sub>2</sub> + <sub>1</sub>z<sub>1</sub> + u<sub>1</sub> K<sub>2</sub> = <sub>2</sub>K<sub>1</sub>+ <sub>2</sub>z<sub>2</sub> + u<sub>2</sub> OLS will suffer from simultaneity bias if: A) u<sub>1</sub> is correlated with z<sub>1</sub>. B) z<sub>1</sub> is correlated with z<sub>2</sub>. C) K<sub>2</sub> is correlated with u<sub>1</sub>. D) K<sub>1</sub> is correlated with u<sub>1</sub>. 1K2 + The following equations represent a simultaneous equations model: K<sub>1</sub> = <sub>1</sub>K<sub>2</sub> + <sub>1</sub>z<sub>1</sub> + u<sub>1</sub> K<sub>2</sub> = <sub>2</sub>K<sub>1</sub>+ <sub>2</sub>z<sub>2</sub> + u<sub>2</sub> OLS will suffer from simultaneity bias if: A) u<sub>1</sub> is correlated with z<sub>1</sub>. B) z<sub>1</sub> is correlated with z<sub>2</sub>. C) K<sub>2</sub> is correlated with u<sub>1</sub>. D) K<sub>1</sub> is correlated with u<sub>1</sub>. 1z1 + u1
K2 = The following equations represent a simultaneous equations model: K<sub>1</sub> = <sub>1</sub>K<sub>2</sub> + <sub>1</sub>z<sub>1</sub> + u<sub>1</sub> K<sub>2</sub> = <sub>2</sub>K<sub>1</sub>+ <sub>2</sub>z<sub>2</sub> + u<sub>2</sub> OLS will suffer from simultaneity bias if: A) u<sub>1</sub> is correlated with z<sub>1</sub>. B) z<sub>1</sub> is correlated with z<sub>2</sub>. C) K<sub>2</sub> is correlated with u<sub>1</sub>. D) K<sub>1</sub> is correlated with u<sub>1</sub>. 2K1+ The following equations represent a simultaneous equations model: K<sub>1</sub> = <sub>1</sub>K<sub>2</sub> + <sub>1</sub>z<sub>1</sub> + u<sub>1</sub> K<sub>2</sub> = <sub>2</sub>K<sub>1</sub>+ <sub>2</sub>z<sub>2</sub> + u<sub>2</sub> OLS will suffer from simultaneity bias if: A) u<sub>1</sub> is correlated with z<sub>1</sub>. B) z<sub>1</sub> is correlated with z<sub>2</sub>. C) K<sub>2</sub> is correlated with u<sub>1</sub>. D) K<sub>1</sub> is correlated with u<sub>1</sub>. 2z2 + u2
OLS will suffer from simultaneity bias if:


A) u1 is correlated with z1.
B) z1 is correlated with z2.
C) K2 is correlated with u1.
D) K1 is correlated with u1.

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