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Consider the Following Simple Regression Model Y=β0+ β1x1+ U

Question 10

Multiple Choice

Consider the following simple regression model y=β0+ β1x1+ u.Suppose z is an instrument for x.Which of the following conditions denotes instrument relevance?


A) Cov(z,u) > 0
B) Cov(z,u) < 0
C) Cov(z,x) ≠ 0
D) Cov(z,x) =0

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