The following model yt =$\beta$₀ + $\beta$₁t + $\beta$2t² + $\beta$₃t³ + $\varepsilon$_t allows for what changes in a series? A) allows for a curvature indicating the change of direction B) allows for one change in the direction of a series C) allows for two changes in the directions of a series D) allows for the increase in the time period and standard error of the estimate

Question

Quizplus · Accepted Answer

The model described includes terms that allow for changes in the direction of a series over time, specifically through the inclusion of terms that can model curvature or changes in trend. The presence of multiple terms that can adjust for changes in direction (e.g., quadratic or interaction terms) suggests that the model is designed to accommodate more than one change in direction, making option C the correct choice.

The Following Model Yt = β\betaβ 0 β\betaβ 1t β\betaβ 2t2

The Following Model Yt = $\beta$ ₀ $\beta$ ₁t $\beta$ 2t²