The model x_t_? = α₁x_{t - 1} + e_t ,t =1,2,…. ,where e_t is an i.i.d.sequence with zero mean and variance σ²_e represents a(n): A)moving average process of order one. B)moving average process of order two. C)autoregressive process of order one. D)autoregressive process of order two.

Question

Quizplus · Accepted Answer

The given model is an autoregressive process of order one (AR(1)) because it expresses the current value x_t as a function of its immediately preceding value x_(t-1) and a random error term e_t.

The Model Xt? = α1xt - 1 + Et ,T

The Model X_t_? = α₁x_{t - 1} + E_t ,T