In an effort to determine the effect of internal budget reviews on profit performance, your firm has collected data across many branches on whether the branch went through a careful budget review last year (year 1) and its profit per unit produced this year (year 2). Your estimated regression equation is: Profit-per-Unit2 = 27+1.8 x Review/ a. Omitted variables with what feature(s) could be generating an endogeneity problem in this regression? Instructions: In order to receive full credit, you must make a selection for each option. For correct answer(s), click the box once to place a check mark. For incorrect answer(s), click the option twice to empty the box. ? They are correlated with a review in year 1. ? They are uncorrelated with profit in year 2 ? They are uncorrelated with a review in year 1. ? They are correlated with profit in year 2. b. What is the likely sign of the bias in our estimated effect of a budget review? There likely is no bias. Negative Positive