Final Exam Review

If the t statistic for the presence of a unit root in a variable is −7.22 and the 5% critical value is −2.86, there is strong evidence against a unit root in the variable.

The R2 calculated in a spurious regression is a valid and efficient estimate of the goodness-of-fit of the regression equation.

The short-run elasticity measures the immediate percentage change in a dependent variable given a 1% increase in the independent variables.

The variance of a random walk process decreases as a linear function of time.