If data exhibits a trend that is stochastic then:
A) Policy measures can be applied when it deviates from trend.
B) Policy measures can be applied when it is below trend.
C) Policy measures might be applied that are unnecessary and possibly distorting.
D) Policy measures can be applied when it is above trend.

Question

Quizplus · Accepted Answer

Stochastic trends are unpredictable and do not follow a well-defined pattern, so attempting to apply policy measures based on deviations from the trend or relative position to the trend may not be effective and could potentially lead to unintended consequences. Therefore, policy measures applied to stochastic trends may be unnecessary and possibly distorting.

If Data Exhibits a Trend That Is Stochastic Then