What Is the Impact of Shocks to an AR(1) with No

question 19

Multiple Choice

What is the impact of shocks to an AR(1) with no drift if ?

• A) Shocks will gradually die away
• B) Shocks persist in the system and never die away
• C) Shocks will start to increase after the next observation but gradually die away
• D) Shocks become more and more influential as time goes on

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