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? A) ln(y_t) = β₀ + β₁d₁ + β₂d₂ + β₃d₃ + β₄t + ε_t B) y_t = β₀ + β₁d₁ + β₂d₂ + β₃d₃ + β₄t + ε_t C)ln(y_t) = β₀ + β₁d₁ + β₂d₂ + β₃d₃ + β₄d₄ + β₅t + ε_t D)y_t = β₀ + β₁d₁ + β₂d₂ + β₃d₃ + β₄d₄ + β₅t + ε_t

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Quizplus · Accepted Answer

Model B is a linear model with a fixed intercept and regression coefficients for each season. This model is appropriate for a quarterly time series that seems to change by a fixed amount with seasonality. The seasonality component is captured by including dummy variables d₁, d₂, and d₃ which represent the three quarters in each year. The intercept captures the overall level of the time series. Model A includes a logarithmic transformation of the dependent variable, which is not necessary for a time series with fixed changes over time and seasonality. Model C and D include multiplicative transformations of the dependent variable, which are not appropriate for this type of time series.

Which of the Following Models Is Considered for a Quarterly