The Following Is Not an Appropriate Way to Tell Whether

question 11

Multiple Choice

The following is not an appropriate way to tell whether two variables are cointegrated:

• A)see if the two variables are integrated of the same order.
• B)graph the series and see whether they appear to have a common stochastic trend.
• C)perform statistical tests for cointegration.
• D)use expert knowledge and economic theory.

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Definitions:

Reforms

Changes made to improve a system, law, institution, or practice that are often enacted in response to instances of inefficiency or injustice.

Economic Model

A theoretical construct representing economic processes by a set of variables and a set of logical and/or quantitative relationships between them.

Simplified

Made easier to understand or do; reduced in complexity.

Reality

The state of things as they actually exist, as opposed to how they may appear or may be thought to be.