A Disadvantage of Univariate Time-Series Models and VARs Is

question 19

Multiple Choice

A disadvantage of univariate time-series models and VARs is

• A)they cannot be used easily to analyze the effects of monetary policy.
• B)they are based on classical, rather than Keynesian, economic theory.
• C)they provide poor forecasts.
• D)they are not based on data.

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Definitions:

Portfolio

A portfolio represents a collection of financial investments like stocks, bonds, commodities, cash, and cash equivalents, including mutual funds and ETFs.

Promissory Note

A financial instrument that contains a written promise by one party to pay another party a definite sum of money either on demand or at a specified future date.

Compounded Semiannually

Interest calculation method where interest is added to the principal on a semiannual basis, leading to interest on interest in the second half of the year.

Quarterly Compounded

Interest calculation method where the accrued interest is added to the principal balance four times a year, allowing interest to be earned on interest.