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Which of the Following Correctly States Concerns About Stationarity for the Following

Question 13

Multiple Choice

Which of the following correctly states concerns about stationarity for the following model:
Yt = γ\gamma Yt-1 + β\beta 0 + β\beta 1Xt + ε\varepsilon t


A) If γ\gamma<\lt 1, the model is stationary and spurious regression results are likely.
B) If γ\gamma =1, the model will "blow up" as Y will get larger and larger in every period.
C) If γ\gamma >\gt 1, the model will "blow up" as Y will get larger and larger in every period.
D) If γ\gamma =1, the model is stationary and spurious regression results are likely.

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