Consider the following simple regression model y = 0 + 1x1 + 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 z) = 0


Answer: C

Economics

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An increase in the monetary base that goes into currency is ________, while an increase that goes into deposits is ________

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Economics