The IV regression assumptions include all of the following with the exception of
A) the error terms must be normally distributed.
B) E(ui W1i,…, Wri) = 0.
C) Large outliers are unlikely: the X's, W's, Z's, and Y's all have nonzero, finite fourth moments.
D) (X1i,…, Xki, W1i,…,Wri, Z1i, … Zmi, Yi) are i.i.d. draws from their joint distribution.
Ans: A) the error terms must be normally distributed.
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a. The wage that a worker earns is a function of her human capital. b. A firm's demand for college textbook study guide authors is inseparably linked to the supply of college textbooks. c. Factors that increase the demand for labor will increase the equilibrium wage. d. All of the above are correct.
The self-correcting tendency of the economy means that rising inflation eventually eliminates:
A. unemployment. B. recessionary gaps. C. exogenous spending. D. expansionary gaps.
Monetary policy authorities can only affect the real economy, if:
a. their actions are anticipated by the public b. their actions are fully communicated to the public c. their actions are consistent and predictable. d. their actions systematically fool the public
Use the above figure. The consumer's choice changes from YA to YB. Which of the following statements about good Y is TRUE?
A. price has decreased and the quantity demanded has fallen. B. price has increased and the quantity demanded has fallen. C. price has decreased and the quantity demanded has risen. D. price has increased and the quantity demanded has risen.