Which of These Is an Approach Used to Determine the Appropriate

question 7

Multiple Choice

Which of these is an approach used to determine the appropriate lag lengths of VAR models?

• A) Graphically plotting the time series of the data
• B) Selecting the number of lags that maximises the information criteria
• C) Selecting the number of lags that minimises the information criteria
• D) None of the above

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Definitions:

Linear Regression Equation

A mathematical expression defining a direct relationship between a single dependent variable and several independent variables.

Best Fit

A line or curve that represents the best approximation of a set of data points, often determined by minimizing the differences between the estimated and observed values.

Variables

Elements, features, or factors that are liable to vary or change within the context of a scientific study or experiment.

Regression Coefficient

A value that represents the degree of change in the dependent variable for a one-unit change in the independent variable in a regression analysis.