The Granger Causality Test

question 13

Multiple Choice

The Granger Causality Test

• A)uses the F-statistic to test the hypothesis that certain regressors have no predictive content for the dependent variable beyond that contained in the other regressors.
• B)establishes the direction of causality (as used in common parlance)between X and Y in addition to correlation.
• C)is a rather complicated test for statistical independence.
• D)is a special case of the Augmented Dickey-Fuller test.

---

Definitions:

Recession

A significant decline in economic activity spread across the economy, lasting more than a few months, usually visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.

Automatic Stabilizers

Economic mechanisms, such as progressive taxation and welfare, that automatically adjust to counteract economic fluctuations without the need for explicit government intervention.

Unemployment Compensation

A government program that provides financial assistance to individuals who have lost their jobs through no fault of their own.

Public Debt

The total amount of money that a government owes to creditors, typically as a result of borrowing to finance its expenditures.