Which of the following assumptions is known as exclusion restrictions?

A. The assumption that an instrumental variable is excluded from a regression model and is correlated with the error term.
B. The assumption that an instrumental variable is excluded from a regression model and is correlated with an exogenous explanatory variable.
C. The assumption that an exogenous explanatory variable is excluded from a regression model and is uncorrelated with the error term.
D. The assumption that an endogenous explanatory variable excluded from a regression model and is uncorrelated with the error term.


Answer: C

Economics

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