Question #13
Reading: Reading 2 Time-Series Analysis
PDF File: Reading 2 Time-Series Analysis.pdf
Page: 5
Status: Unattempted
Correct Answer: A
Question
In the time series model: yt=b0 + b1 t + εt, t=1,2,...,T, the:
Answer Choices:
A. change in the dependent variable per time period is b1
B. disturbance terms are autocorrelated
C. disturbance term is mean-reverting
Explanation
The slope is the change in the dependent variable per unit of time. The intercept is the
estimate of the value of the dependent variable before the time series begins. The
disturbance term should be independent and identically distributed. There is no reason to
expect the disturbance term to be mean-reverting, and if the residuals are autocorrelated,
the research should correct for that problem.