The Following Two Graphs Give You a Plot of the United

question 44

Essay

The following two graphs give you a plot of the United States aggregate unemployment rate for the sample period 1962:I to 1999:IV, and the (log)level of real United States GDP for the sample period 1962:I to 1995:IV. You want test for stationarity in both cases. Indicate whether or not you should include a time trend in your Augmented Dickey-Fuller test and why.

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Definitions:

Government Failure

Situations where government intervention in the economy creates inefficiency, leading to a misallocation of resources or failure to achieve intended outcomes.

Rent Seeker

An individual or entity that seeks to increase their own wealth without creating new wealth, often by exploiting control over resources or manipulating regulations.

Rent-seeking Behavior

Activities aimed at increasing one’s share of existing wealth without creating new wealth, often through manipulation or exploitation of the economic environment.

Gasoline Price Supports

Governmental interventions aimed at stabilizing or raising the market price of gasoline through mechanisms like subsidies, taxes, or setting minimum prices to benefit producers.