Which of the following is the most appropriate approach to determine if the time series has a unit root?

A. Performing a Dickey-Fuller test.
B. Modeling the first differences of the time series.
C. Performing a log-linear transformation.

Correct Answer: A

A Dickey-Fuller test can be used to establish if the time series has a unit root.

A time series with unit roots should be transformed by first-differencing it to a covariance stationary time series, which can be effectively analyzed using regression analysis.

A log-linear transformation is appropriate when data grows at a constant rate.