Refer to the Following Model

question 16

Multiple Choice

Refer to the following model. y_t = ₀ + ₀s_t + ₁s_t-1 + ₂s_t-2 + ₃s_t-3 + u_{t 0} + ₁ + ₂ + ₃ represents:

• A)the short-run change in y given a temporary increase in s.
• B)the short-run change in y given a permanent increase in s.
• C)the long-run change in y given a permanent increase in s.
• D)the long-run change in y given a temporary increase in s.

---

Definitions:

Investing

The act of allocating resources, typically money, with the expectation of generating an income or profit.

Interest Rate

The amount charged by lenders to borrowers for the use of assets, expressed as a percentage of the principal, the rate can influence inflation and economic activity.

Investing

Channeling money or assets towards avenues with the expectation of profit or income generation.

Interest Rate

The rate, expressed as a share of the principal, that a lender charges a borrower for the borrowing of assets.