The Random Walk Model Is Written As $Y _ { t } = Y _ { t - 1 } + m + e _ { t }$

question 21

Multiple Choice

The random walk model is written as: $Y _ { t } = Y _ { t - 1 } + m + e _ { t }$
) In this model, $e _ { t }$
Represents the:

• A) average of the Y's
• B) average of the X's
• C) forecasted value
• D) random series with mean 0 and some constant standard deviation

---

Definitions:

Horizontal Axis

In a graph or chart, the x-axis, representing the independent variable or the base line for measuring.

Vertical Axis

In a graph or chart, the y-axis which typically represents the dependent variable or outcome in relation to the independent variable on the horizontal axis.

Slope

In mathematics, the measure of the steepness or incline of a line, typically defined as the ratio of the vertical change to the horizontal change between two points on the line.

Y-axis

The vertical line on a graph, typically representing the dependent variable in a two-dimensional coordinate system.