Deck 5: Business and Economic Forecasting

Question 1

The type of economic indicator that can best be used for business forecasting is the:

A) leading indicator
B) coincident indicator
C) lagging indicator
D) current business inventory indicator
E) optimism/pessimism indicator

Answer 1

A

Question 2

Time-series forecasting models:

A) are useful whenever changes occur rapidly and wildly
B) are more effective in making long-run forecasts than short-run forecasts
C) are based solely on historical observations of the values of the variable being forecasted
D) attempt to explain the underlying causal relationships which produce the observed outcome
E) none of the above

Answer 2

C

Question 3

Smoothing techniques are a form of ____ techniques which assume that there is an underlying pattern to be found in the historical values of a variable that is being forecast.

A) opinion polling
B) barometric forecasting
C) econometric forecasting
D) time-series forecasting
E) none of the above

Answer 3

D

Question 4

Which of the following barometric indicators would be the most helpful for forecasting future sales for an industry?

A) lagging economic indicators.
B) leading economic indicators.
C) coincident economic indicators.
D) wishful thinking
E) none of the above

Question 5

An example of a time series data set is one for which the:

A) data would be collected for a given firm for several consecutive periods (e.g.,months).
B) data would be collected for several different firms at a single point in time.
C) regression analysis comes from data randomly taken from different points in time.
D) use of regression analysis would impossible in time series.
D)data is created from a random number generation program.

Question 6

Seasonal variations can be incorporated into a time-series model in a number of different ways,including:

A) ratio-to-trend method
B) use of dummy variables
C) root mean squared error method
D) a and b only
E) a,b,and c

Question 7

Milner Brewing Company experienced the following monthly sales (in thousands of barrels)during 2010:

Question 8

If two alternative economic models are offered,other things equal,we would

A) tend to pick the one with the lowest R^2.
B) select the model that is the most expensive to estimate.
C) pick the model that was the most complex.
D) select the model that gave the most accurate forecasts
E) all of the above

Question 9

The forecasting technique which attempts to forecast short-run changes and makes use of economic indicators known as leading,coincident or lagging indicators is known as:

A) econometric technique
B) time-series forecasting
C) opinion polling
D) barometric technique
E) judgment forecasting

Question 10

The variation in an economic time-series which is caused by major expansions or contractions usually of greater than a year in duration is known as:

A) secular trend
B) cyclical variation
C) seasonal effect
D) unpredictable random factor
E) none of the above

Question 11

Select the correct statement.

A) Qualitative forecasts give the direction of change.
B) Quantitative forecasts give the exact amount or exact percentage change.
C) Diffusion forecasts use the proportion of the forecasts that are positive to forecast up or down.
D) Surveys are a form of qualitative forecasting.
E) all of the above are correct.

Question 12

In the first-order exponential smoothing model,the new forecast is equal to a weighted average of the old forecast and the actual value in the most recent period.

Question 13

All of the following are criteria used to select a forecasting technique EXCEPT:

A) ​the accuracy required of the forecasting model
B) ​the time required to complete the model
C) ​the complexity of the relationships being forecast
D) ​the cost associated with developing the forecasting model
E) ​all of these are criteria used to select a forecasting technique

Question 14

Simplified trend models are generally appropriate for predicting the turning points in an economic time series.

Question 15

Consumer expenditure plans is an example of a forecasting method.Which of the general categories best described this example?

A) time-series forecasting techniques
B) barometric techniques
C) survey techniques and opinion polling
D) econometric techniques
E) input-output analysis

Question 16

Variations in a time-series forecast can be caused by:

A) cyclical variations
B) secular trends
C) seasonal effects
D) a and b only
E) a,b,and c

Question 17

The use of quarterly data to develop the forecasting model Y_t = a +bY_t−1 is an example of which forecasting technique?

A) Barometric forecasting
B) Time-series forecasting
C) Survey and opinion
D) Econometric methods based on an understanding of the underlying economic variables involved
E) Input-output analysis

Question 18

For studying demand relationships for a proposed new product that no one has ever used before,what would be the best method to use?

A) ordinary least squares regression on historical data
B) market experiments,where the price is set differently in two markets
C) consumer surveys,where potential customers hear about the product and are asked their opinions
D) double log functional form regression model
E) all of the above are equally useful in this case

Question 19

Regarding forecasting,which of the following statements is NOT true?

A) ​Operations managers need sales forecasts to plan future production.
B) ​Financial managers need estimates of future sales revenues,disbursements & capital expenditures in order to plan effectively.
C) ​Forecasts of credit conditions are needed to plan the cash needs of the firm.
D) ​Public administrators and managers of NFP corporations need not forecast,since they need not make a profit.
E) ​Both c and d are false.