The reduced form equation for X
A) regresses the endogenous variable X on the smallest possible subset of regressors.
B) relates the endogenous variable X to all the available exogenous variables, both those included in the regression of interest and the instruments.
C) uses the predicted values of X from the first stage as a regressor in the original equation.
D) uses smaller standard errors, such as homoskedasticity-only standard errors, for inference.
Answer: B) relates the endogenous variable X to all the available exogenous variables, both those included in the regression of interest and the instruments.
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At the market output and price for a good whose production causes pollution:
a. pollution is eliminated. b. the marginal social cost of production exceeds the marginal social benefit of production c. the private cost of production equals the private benefit of production. d. the marginal social benefit of production equals the marginal social cost of production.
Public choice analysis indicates that it will be politically more attractive to
a. enact restrictive fiscal policy during an economic expansion than to enact expansionary fiscal policy during a recession. b. enact expansionary fiscal policy during an economic expansion than to enact restrictive fiscal policy during a recession. c. enact expansionary fiscal policy during a recession than to enact restrictive fiscal policy during an economic expansion. d. raise taxes than to increase spending.