Which of the Following Statements Is True of Spurious Regressions

question 4

Multiple Choice

Which of the following statements is true of spurious regressions?

• A)The OLS estimates of the population parameters are efficient and unbiased and the t statistic is valid.
• B)Even if the explanatory variables and the dependent variable are independent times series processes,the R² can large.
• C)Spurious regressions are limited to I(0)processes,and are not possible in case of I(1)processes.
• D)Spurious regressions are limited to I(1)processes,and are not possible in case of I(0)processes.

---

Definitions:

Investments

Assets purchased with the goal of generating income or appreciating in value over time.

Consultant's Fee

The amount charged by a consultant for their professional advice or services.

Computer Equipment

Tangible assets related to computers and technology used in the operational activities of a business, such as servers, desktops, and peripherals.

Capital Expenditures

Investments in physical assets like property, plant, and equipment, which are expected to improve a company’s future productive capacity.