Exam 18: Time Series and Forecasting

Based on quarterly data collected over the last four years, the following regression equation was found to forecast the quarterly demand for the number of new copies of an economics textbook: _t = 3,305 - 665Qtr1 - 1,335Qtr2 + 305Qtr3, where Qtr1, Qtr2, and Qtr3 are dummy variables corresponding to Quarters 1, 2, and 3. The demand forecast for Quarter 2 of the next year is ________.

In the model y_t = β₀ + β₁y_t-1 + ε_t, the parameter β₁ represents the ________ of the lagged response variable y.

Which of the following is true of the exponential smoothing method?

The following table shows the annual revenues (in millions of dollars) of a pharmaceutical company over the period 1990-2011. The scatterplot indicates that the annual revenues have an increasing trend. Linear, exponential, quadratic, and cubic models were fit to the data starting with t = 1, and the following output was generated. When three polynomial trend equations are compared, which of them provides the best fit?

The following ratio-to-moving averages for the seasonally adjusted series were found by the decomposition method applied on a time series representing quarterly sales for the last three years: If the trend is described by the trend line = 1,000 + 30t, what is the forecast for the fourth quarter of this year?

Quarterly sales of a department store for the last seven years are given in the following table. The scatterplot shows that the quarterly sales have an increasing trend and seasonality. A linear regression model given by, Sales = β₀ + β₁Qtr1 + β₂Qtr2 + β₃Qtr3 + β₄t + ε, where t is the time period (t = 1, ..., 28) and Qtr1, Qtr2, and Qtr3 are quarter dummies, is estimated and then used to make forecasts. For the regression model, the following partial output is available. Using the decomposition method: A) Compute the adjusted seasonal indices for the four quarters. B) Find the linear trend equation for the seasonally adjusted quarterly sales. C) Make the sales forecasts for the first and fourth quarter of Year 8.

Causal forecasting models are based on a regression model framework, where the variable of interest depends on one or more explanatory variables.

If the regression framework is used to describe monthly seasonal data, how many dummy variables are needed?

Using the decomposition model y_t = T_t × S_t × I_t , forecasts are made by ________, where _t and _t represent the estimated trend and the (adjusted) seasonal index for period t, respectively.

The optimal value of the speed of decline in the exponential smoothing procedure is determined by a(n) ________ method.

Which of the following is not an example of a time series?

Which of the following models is considered for a quarterly time series that seems to change on average by a fixed amount and seems to have seasonality?

The exponential smoothing method weighs all available observations in a time series equally.

Based on quarterly data collected over the last five years, the following regression equation was found to forecast the quarterly demand for the number of new copies of a business statistics textbook: _t = 2,298 - 6,635Qtr1 - 1,446Qtr2 + 303Qtr3 + 26t, where Qtr1, Qtr2, and Qtr3 are dummy variables corresponding to Quarters 1, 2, and 3, and t = time period starting with t = 1. For a given year, the demand in Quarter 3 is on average ________.

The following ratio-to-moving averages for the seasonally adjusted series were found by the decomposition method applied on a time series representing quarterly sales for the last three years: By what percent does the sales in Quarter 4 exceed the average quarterly sales?

Which of the following models is assumed for a quarterly time series that seems to grow on average by an increasing amount (or decline by a decreasing amount) and seems to have seasonality?

The cyclical component of a time series typically represents repetitions within a one-year period.

When the increase in the series gets larger over time, it is attractive to use a(an) ________ trend model.

A polynomial trend model that only allows one change in the direction of a series is known as a(n) ________.

Noncausal forecasting models are purely time series models in the sense that the forecasts are made based only on historical data concerning the variable of interest.