Solved

The Acf Is Clearly Declining Very Slowly in This Case

question 23

Multiple Choice

The acf is clearly declining very slowly in this case, which is consistent with their being an autoregressive part to the appropriate model. The pacf is clearly significant for lags one and two, but the question is does it them become insignificant for lags 2 and 4, indicating an AR(2) process, or does it remain significant, which would be more consistent with a mixed ARMA process? Well, given the huge size of the sample that gave rise to this acf and pacf, even a pacf value of 0.001 would still be statistically significant. Thus an ARMA process is the most likely candidate, although note that it would not be possible to tell from the acf and pacf which model from the ARMA family was more appropriate. The DGP for the data that generated this plot was y_t = 0.9 y_(t-1) - 0.3 u_(t-1) + u_t.
-If a series, y, is described as "mean-reverting", which model from the following list is likely to produce the best long-term forecasts for that series y?

Definitions:

Sad Affect

A visible expression of sorrow or unhappiness, often noted as a clinical symptom in psychological assessment.

Chronic Low Self-esteem

A long-term negative perception of oneself that affects an individual's confidence and self-worth persistently.

Negative Feedback

A process by which a system regulates itself by reducing the output or activity when it becomes too high, aiming to maintain stability or equilibrium.

Interpersonal Skills

Abilities that facilitate effective communication and interaction with others.