Multiple Choice
The two conditions for a valid instrument are
A) corr(Zi,Xi) = 0 and corr(Zi,ui) ≠ 0.
B) corr(Zi,Xi) = 0 and corr(Zi,ui) = 0.
C) corr(Zi,Xi) ≠ 0 and corr(Zi,ui) = 0.
D) corr(Zi,Xi) ≠ 0 and corr(Zi,ui) ≠ 0.
Correct Answer:
Verified
Correct Answer:
Verified
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