Refer to the Simultaneous Equations Model Above

Multiple Choice

Refer to the simultaneous equations model above.The reduced form error from the reduced form equation for K₂ will be a:

A) quadratic function of u₁ and u₂?,and correlated with z_1? and z₂.
B) quadratic function of u₁ and u₂?,and uncorrelated with z_1? and z₂.
C) linear function of u₁ and u₂?,and correlated with z_1? and z₂.
D) linear function of u₁ and u₂?,and uncorrelated with z_1? and z₂.