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Consider the model:

$$y_t = \beta_0 + \beta_1 X_t + u_t$$

What function represents an AR(1) serial correlation structure for the error term, $u_t$?

$u_t = \rho u_{t-1} + e_t,$ where $|\rho| < 1$

$u_t = \rho u_{t-1} + e_t,$ where $|\rho| = 1$

$u_t = \rho u_{t-1} + e_t,$ where $|\rho| > 1$

$u_t = \rho u_{t-1} + e_t,$ where $|\rho| = 0$

$u_t = \rho y_{t-1} + e_t,$ where $|\rho| < 1$