1. Describe the signs of nonstationarity seen in the time series and ACF plots.

2. Do the differenced series appear stationary according to the augmented DickeyFuller tests? Do you see evidence of autocorrelations in the differenced series? If

so, describe these correlations.

3. Consider the AR (1) model Yt = 5 0.55Yt1 + _t and assume that 2 = 1.2.

(a) Is this process stationary? Why or why not?

(b) What is the mean of this process?

(c) What is the variance of this process?

(d) What is the covariance function of this process?