Consider Dt = apt + b
St = Apt-1 + B
Choose the correct answer.
(i) If \(\frac{1}{|a|}<\frac{1}{|A|}\), the market is dynamically stable.
(ii) If\(\frac{1}{|a|}>\frac{1}{|A|}\), the market is dynamically unstable.
(iii) If \(\frac{1}{|a|}=\frac{1}{|A|}\), the market is dynamically stable.
(iv) If \(|a|<|A|\), the market is dynamically stable.
1
Both (i) and (ii) are true
2
Both (i) and (iv) are true
3
Only (iii) is true
4
(i), (ii) and (iv) are true