If a Johansen "Max" Test for a Null Hypothesis of 1

question 21

Multiple Choice

If a Johansen "max" test for a null hypothesis of 1 cointegrating vectors is applied to a system containing 4 variables is conducted, which eigenvalues would be used in the test?

• A) The largest 1
• B) The Second largest
• C) The Second smallest
• D) The smallest

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Definitions:

Expansionary Fiscal Policy

involves government spending and tax cuts to stimulate the economy during a recession.

Net Investment Spending

Represents the total amount spent on new capital assets minus the depreciation of existing assets, indicating how much a company is investing in its future growth.

Fiscal Policy

Government policies regarding taxation and spending to influence the economy.

Monetary Policy

Monetary policy refers to the process by which the central bank of a country manages the money supply and interest rates to influence economic activity and maintain economic stability.