Which of These Is Not a Consequence of Ignoring Autocorrelation

question 26

Multiple Choice

Which of these is not a consequence of ignoring autocorrelation if it is present?

• A) The coefficient estimates derived using OLS are inefficient
• B) Standard error estimates are inappropriate
• C) The coefficient estimates derived using OLS are biased
• D) The coefficient estimates derived using OLS are not the best linear unbiased estimators

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Definitions:

Economy Output

The total value of all goods and services produced by an economy over a specific time period, also known as gross domestic product (GDP).

Equation of Exchange

The Equation of Exchange is an economic identity that relates the supply of money in an economy to the value of goods and services transactions, commonly represented as MV = PQ.

Modern Monetarists

Economists who follow the beliefs of monetarism that emphasize the role of governments in controlling the amount of money in circulation to influence the economy.

Velocity V

The rate at which money circulates in an economy, typically measured as the ratio of nominal GDP to the money supply.