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Instrument Relevance A XX And uu Are Correlated And ZZ And uu Are Not Correlated

Question 14

Short Answer

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 XX and uu are correlated and ZZ and uu are not correlated.

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