Is the following statement true or false If it is false brie

Is the following statement true or false? If it is false, briefly explain why. Regression models for time series should either use time trends or lags of yt as predictors, but never mix the two. Choose the correct answer below. True. False, because lags of yt and time trends are the same type of predictor. False, because the only way to reduce colinearity is to include both. False, because any predictors that improve the model should be included.

Solution

the porcess of calulating a trend is exactly the same as that of lag of y_t...so!

b) False because lags of y_t and time trends are the same type of predictors!