Deck 18: Time Series and Forecasting

Question 1

In a time series,economic periods of prosperity followed by recession are described as a(n)________.

A)secular trend
B)seasonal variation
C)cyclical variation
D)erratic variation

Answer 1

cyclical variation

Question 2

When estimating the specific seasonals for a monthly time series,the sum of the 12 modified means should theoretically be equal to 12.00 because the average of the 12 specific seasonals is designated as 1.00.

Answer 2

True

Question 3

If the time series trend is nonlinear,a transformation of the data is required.

Answer 3

True

Question 4

If the past data approximates a straight line,the equation used is = a + bt,where a is the Y-intercept and b is the slope of the line.

Question 5

A typical seasonal index of 103.7 for January indicates that sales for January are below the annual average.

Question 6

If the trend equation is = 10 + 100t,the forecasted value increases 100 units for the next time period,t.

Question 7

The following linear trend equation was developed for annual sales from 2005 to 2009,with 2005 as the base year. = 500 + 60t (in thousand $). What are the estimated sales for 2010 (in thousand $)?

A)$500
B)$860
C)$1,040
D)$1,100

Question 8

Autocorrelation is measured by the trend component of a time series.

Question 9

An analysis of past seasonal fluctuations can be helpful in planning production for items such as toys,dolls,Easter eggs,and other holiday-oriented goods.

Question 10

The merchants in Dallas,Texas,suffered flood damage in May 2003. Stores were closed for remodeling nearly two months. What is this type of variation in sales called?

A)Secular trend
B)Seasonal variation
C)Cyclical variation
D)Episodic variation

Question 11

In the linear trend equation,the letter b is the average change in for each increase of one unit in t.

Question 12

Because a ski resort does most of its business in the winter,what is the major source of variation that affects sales?

A)Secular trend
B)Seasonal variation
C)Cyclical effect
D)Episodic effects

Question 13

Knowing the seasonal pattern in the form of indexes allows the retailer to deseasonalize sales. This is accomplished by dividing the actual sales for a month by the seasonal index for that month.

Question 14

In a time series,high sales in the summer and low sales in the winter is called ________.

A)secular trend
B)seasonal variation
C)cyclical variation
D)variation

Question 15

The moving average method smooths out the fluctuations in the data.

Question 16

In the final step,using the ratio-to-moving-average method,the total of the 12 modified means should theoretically be equal to 12.00 because the average of the 12 months is designated as 1.00.

Question 17

One component of a time series is cyclical variation. An example of cyclical variation is the business cycle that consists of periods of prosperity followed by periods of recession,depression,and recovery.

Question 18

Episodic and residual variations can be projected into the future.

Question 19

The Durbin-Watson statistic is used to test for correlated residuals.

Question 20

In a linear trend equation,t is a coded value that corresponds with a time period in a time series.

Question 21

If the exports (in million $)for the period 2006 through 2010 were $878,$892,$864,$870,and $912,respectively,what are these values called?

A)Moving average
B)Linear trend equation
C)Logarithmic trend equation
D)Time-series data

Question 22

Which one of the following is not a component of a time series?

A)Secular trend
B)Moving average
C)Seasonal variation
D)Irregular variation

Question 23

A time series is a collection of data that ________.

A)records past performance
B)records future performance
C)is limited to yearly data
D)is limited to quarterly data

Question 24

If the least squares equation for sales data going from 2004 to 2008 is = 10 + 1.3t (in million $),what is the value of t and the forecast for 2010?

A)t = 6, = 17.8
B)t = 0, = 10.0
C)t = 7, = 19.1
D)t = 6, = 0.0

Question 25

Why are long-range predictions considered essential to managing a firm?

A)To develop plans for possible new plants
B)To have raw materials available for future demand
C)To develop plans for future financing
D)All of these answers are correct

Question 26

What is the logarithmic transformation for the equation = a + bt?

A)log a = S log /n
B)log = log a + log b(t)
C)log b = S(X log) /t2
D) = abt

Question 27

What is the long-term behavior of a variable over an extended period of time called?

A)Secular trend
B)Seasonal variation
C)Cyclical variation
D)Irregular or erratic variation

Question 28

If a major hurricane exerts an impact on the economy,that event could be classified as a(n)________.

A)secular trend
B)episodic variation
C)residual variation
D)seasonal variation

Question 29

If time-series data are plotted on graph paper having an arithmetic scale that increases or decreases by equal percents,what type of graph will it be?

A)Straight line
B)Linear
C)Curvilinear
D)Logarithmic

Question 30

What is the general equation for the logarithmic trend equation to forecast Ŷ?

A)log a + log b(t)
B)log at log b(t)
C)at b(t)
D)ab(t)

Question 31

For a time series beginning with 1991 and extending up to 2010,which year would be coded with a 1 when using the coded method?

A)1989
B)1991
C)1992
D)2001

Question 32

A linear trend equation is used to represent time-series values when the data are changing by equal ________.

A)percents
B)proportions
C)amounts
D)both percents and proportions

Question 33

What is the correct order of events in a typical business cycle?

A)Prosperity,recession,depression,and recovery
B)Depression,recovery,recession,and prosperity
C)Recovery,depression,prosperity,and recession
D)Recession,recovery,prosperity,and depression

Question 34

For an annual time series extending from 2000 through 2010,how many years would be lost in a three-year moving average?

A)Two at the start and one at the end
B)One at the start and one at the end
C)Two at the start and zero at the end
D)Zero at the start and two at the end

Question 35

Given the trend equation, = 25 + 0.6t (base year = 2006),what would be the forecast value for 2010?

A)25
B)28
C)30
D)32

Question 36

In a linear trend equation,which variable represents the average change in the dependent variable for every unit change in time?

A)a
B)b
C)t
D)

Question 37

What is a in the least squares trend equation?

A)The intercept
B)The slope
C)The forecast
D)The time period

Question 38

For a five-year moving average,how many values will be lost at the beginning and end of the time series?

A)Zero at the start and four at the end
B)Three at the start and three at the end
C)Two at the start and two at the end
D)Zero at the start and five at the end

Question 39

How can you describe the moving average method?

A)A method that smooths out a time series
B)A method to deseasonalize a time series
C)A technique that results in a trend-line equation
D)A method for computing the slope of a trend line

Question 40

The following linear trend equation was developed for the annual sales of the Jordan Manufacturing Company. = 500 + 60t (in thousand $). At what rate are sales increasing?

A)$60,000 per year
B)$6,000 per month
C)$500,000 per year
D)$6,000 per year

Question 41

To calculate monthly typical seasonal indexes,the specific seasonal indexes must be averaged for ________.

A)every month
B)every year
C)every quarter
D)every day

Question 42

To calculate monthly typical seasonal indexes,how many periods are included in the ratio-to-moving-average method?

A)2
B)4
C)6
D)12

Question 43

For the third quarter,the sales are 1,000 units; the seasonal index for the quarter is 0.85. What are the deseasonalized sales for the quarter?

A)1,176
B)1,000
C)850
D)0.15

Question 44

To calculate quarterly typical seasonal indexes,how many periods are included in the ratio-to-moving-average method?

A)2
B)4
C)6
D)12

Question 45

For quarterly seasonal indexes,the total of the adjusted quarterly indexes will equal ________.

A)4.0
B)1.0
C)100%
D)a variable

Question 46

For the third quarter,the sales are 1,500 units; the seasonal index for the quarter is 0.90. What are the deseasonalized sales for the quarter?

A)0.10
B)90
C)1,400
D)1,667

Question 47

To calculate monthly typical seasonal indexes,after computing the ratio-to-moving averages,the averages must be ________.

A)divided by 12
B)multiplied by 12
C)summed and divided by 12
D)centered

Question 48

To calculate monthly typical seasonal indexes,a specific seasonal index must be computed for ________.

A)every month
B)every year
C)every quarter
D)every day

Question 49

The forecast for the third quarter is 1,000 units; the seasonal index for the quarter is 0.85. What are the seasonally adjusted sales for the quarter?

A)1,085
B)850
C)985
D)1,015

Question 50

To calculate monthly typical seasonal indexes,after computing the ratio-to-moving averages,the averages must be ________.

A)divided by 12
B)multiplied by 12
C)summed and divided by 2
D)summed and divided by 12

Question 51

For the third quarter,the sales are 1,500 units; the seasonal index for the quarter is 1.15. What are the deseasonalized sales for the quarter?

A)115%
B)15%
C)1,304
D)1,500

Question 52

Given a linear time-series trend = 5.2 + 3.1t,what is the forecast for 2010 if the time series started in 2003?

A)23.8
B)26.9
C)30.0
D)27.7

Question 53

What time-series component was exemplified during the 1980s when the American economy enjoyed a period of prosperity?

A)Irregular
B)Cyclical
C)Trend
D)Seasonal

Question 54

The forecast for the third quarter is 1,000 units; the seasonal index for the quarter is 1.10. What are the seasonally adjusted sales for the quarter?

A)1,100
B)1,110
C)110
D)100

Question 55

The range of possible values for the Durbin-Watson statistic is ________.

A)any value
B)any value greater than zero
C)any value from zero to four inclusive
D)any value less than zero

Question 56

If a quarterly seasonal index is 0.56,it implies that ________.

A)the quarter's sales are 56% above the yearly average
B)the quarter's sales are 56% of the year total sales
C)the other three quarter percentages will total 44%
D)the quarter's sales are 56% of the yearly average

Question 57

What is an advantage of the least squares method for determining a trend line equation?

A)It minimizes the error sum of squares.
B)It is subject to human error.
C)Forecasts have zero error.
D)It is easy to calculate by hand.

Question 58

A logarithmic trend equation should be used when the time-series trend is ________.

A)changing in equal amounts
B)increasing by equal percentages
C)increasing in equal amounts
D)increasing or decreasing by equal percentages

Question 59

For the third quarter,the sales are 1,000 units; the seasonal index for the quarter is 1.10. What are the deseasonalized sales for the quarter?

A)1,000
B)1,100
C)909
D)0.90

Question 60

The trend forecast equation is = 100 + 120t. The next forecast is for period 8. The typical seasonal index for period 8 is 1.15. What are the forecast sales for period 8?

A)1,060
B)1,219
C)960
D)1,075

Question 61

The trend forecast equation is = 120 + 100t. The next forecast is for period 11. The typical seasonal index for period 11 is 0.82. What are the forecast sales for period 11?

A)1,100
B)1,220
C)1,000
D)640

Question 62

The trend forecast equation is = 50 + 420t. The next forecast is for period 10. The typical seasonal index for period 10 is 1.25. What are the forecast sales for period 10?

A)4,200
B)4,250
C)5,313
D)1,075

Question 63

For the third quarter,the sales are 2,500 units; the seasonal index for the quarter is 1.20. What are the deseasonalized sales for the quarter?

A)1,739
B)2,520
C)2,500
D)2,083

Question 64

The trend forecast equation is = 50 + 420t. The next forecast is for period 10. The typical seasonal index for period 10 is 0.82. What are the forecast sales for period 10?

A)4,200
B)4,250
C)4,000
D)3,485

Question 65

The forecast for the third quarter is 3,000 units; the seasonal index for the quarter is 0.75. What are the seasonally adjusted sales for the quarter?

A)3,000
B)3,079
C)2,250
D)1,015

Question 66

Given the following trend equation based on five years of annual sales (in millions of dollars),beginning in 2005: = 4.53 + 1.54t The estimated value for 2008 is ________.

A)9.15
B)10.69
C)12.23
D)6.07

Question 67

The Durbin-Watson statistic is used to analyze ________.

A)multicollinearity
B)homoscedasticity
C)autocorrelation
D)variance inflation

Question 68

The forecast for the third quarter is 3,000 units; the seasonal index for the quarter is 1.05. What are the seasonally adjusted sales for the quarter?

A)3,000
B)3,005
C)3,150
D)2,360

Question 69

The forecast for the third quarter is 2,000 units; the seasonal index for the quarter is 1.18. What are the seasonally adjusted sales for the quarter?

A)2,000
B)2,018
C)2,118
D)2,360

Question 70

For the following time series,you are given the 3-year moving total. The three-year moving average for 2004 is ________.

A)22
B)21
C)14.33
D)166

Question 71

The following trend equation is for a manufacturer of women's purses (in millions of purses)based on six years of quarterly data. = 2.15 + 1.32t The following table provides the seasonal factors for each quarter. The seasonally adjusted forecast for the second quarter of the fifth year is ________.

A)25.91
B)15.35
C)29.15
D)6.8

Question 72

The Durbin-Watson statistic is based on the ________.

A)differences between successive residuals in a time series
B)differences between successive sales in a time series
C)differences between typical sales indexes
D)differences in time periods

Question 73

The forecast for the third quarter is 2,000 units; the seasonal index for the quarter is 0.79. What are the seasonally adjusted sales for the quarter?

A)1,921
B)1,580
C)790
D)1,015

Question 74

The trend forecast equation is = 100 + 120t. The next forecast is for period 11. The typical seasonal index for period 11 is 1.25. What are the forecast sales for period 11?

A)1,420
B)1,775
C)1,320
D)1,075

Question 75

The time-series component that exhibits fluctuations over more than a year in time above and below the secular trend is ________.

A)Irregular
B)Cyclical
C)Seasonal
D)A trend

Question 76

For the third quarter,the sales are 2,500 units; the seasonal index for the quarter is 0.95. What are the deseasonalized sales for the quarter?

A)1,600
B)2,632
C)2,080
D)2,500

Question 77

For the third quarter,the sales are 2,000 units; the seasonal index for the quarter is 0.80. What are the deseasonalized sales for the quarter?

A)1,600
B)2,000
C)2,080
D)2,500

Question 78

For the third quarter,the sales are 2,000 units; the seasonal index for the quarter is 1.15. What are the deseasonalized sales for the quarter?

A)1,739
B)2,015
C)2,115
D)115

Question 79

Which of the following components is not present in a time series?

A)Secular trend
B)Regular variation
C)Cyclical variation
D)Seasonal variation

Question 80

The trend forecast equation is Ŷ = 120 + 100t. The next forecast is for period 8. The typical seasonal index for period 8 is 0.80. What are the forecast sales for period 8?

A)736
B)920
C)800
D)640