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

Economics

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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.

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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?

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