If You Believe That Expectations React Slowly, You Are Likely

question 85

Multiple Choice

If you believe that expectations react slowly, you are likely

• A)a believer in rational expectations.
• B)a Keynesian.
• C)a theoretical economist.
• D)None of the above is correct.

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Definitions:

Normality Of Errors

An assumption in many statistical models that the errors in the predictions are normally distributed.

Independence Of Errors

Pertains to a condition in statistical analyses where the errors of a model’s predictions are not correlated with each other.

First-Order Autocorrelation

The correlation between sequential observations in a time series, specifically between each observation and its immediate predecessor.

Durbin-Watson Statistic

A measure used in statistics to detect the presence of autocorrelation in the residuals from a linear regression analysis.