The model yt = yt -1 + et, t = 1, 2, … represents a:
A. AR(2) process.
B. MA(1) process.
C. random walk process.
D. random walk with a drift process.
Answer: C
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The quantity of money demanded will decrease if the
A) nominal interest rate decreases. B) price level rises. C) real interest rate decreases. D) inflation rate decreases. E) nominal interest rate increases.
Methods of rent seeking include which of the following? I. Buying a monopoly II. Creating a monopoly III. Price discrimination
A) I and II B) I and III C) II and III D) III only
An increase in demand and an increase in supply will lead to
A) unambiguous increases in both price and quantity. B) unambiguous decreases in both price and quantity. C) an unambiguous increase in quantity, but the effect on price is indeterminate. D) an unambiguous increase in price, but the effect on quantity is indeterminate.
If a 10% decrease in the price of a good leads to a 20% increase in the quantity demanded, then what is the price elasticity of demand?
A. ½. B. 2. C. 20. D. 10.