Instrument relevance
A) means that the instrument is one of the determinants of the dependent variable.
B) is the same as instrument exogeneity.
C) means that some of the variance in the regressor is related to variation in the instrument.
D) is not possible since X and u are correlated and Z and u are not correlated.
Answer: C) means that some of the variance in the regressor is related to variation in the instrument.
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