1. Time Series. Suppose you have quarterly data on new housing starts yt, interest rates rt, and real per-capital income gt. (a) Specify a model for housing starts that accounts for possible trends...

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Extracted text: 1. Time Series. Suppose you have quarterly data on new housing starts yt, interest rates rt, and real per-capital income gt. (a) Specify a model for housing starts that accounts for possible trends and seasonality in the variables (b) Even after accounting for trends and seasonality you suspect there may be serial correlation in the error term. What are the consequences of this for OLS? (c) Specity a test for a simple form of serial correlation. (d) Suppose you conclude based on this test that you do have a problem with serial correlation. Describe a solution.