Question 1

The time series component that reflects variability over short repetitive time periods and has duration of less than one year is called:

Accepted Answer

Seasonal component of a time series reflects the recurring patterns within a single year. These patterns can repeat with a frequency of less than one year, and typically are associated with holidays, weather, and other seasonal events. The other components - trend, cyclical, and random variation - do not have a specific time duration associated with them.

Question 2

The Durbin-Watson test can be used to determine whether the residuals in a regression model are independent.

Accepted Answer

The answer of The Durbin-Watson test can be used to...

Question 3

Which of the following components of a time series measures the overall general directional movement over a long period of time?

Accepted Answer

The component that measures the overall general directional movement over a long period of time is called the trend.

Question 4

The upsurge in school supply sales in the fall of each year is an example of the:

Accepted Answer

The upsurge in school supply sales in the fall of each year is a repeatable pattern that occurs each year, making it a seasonal component.

Question 5

A common method of testing for autocollinearity (serial correlation)is a Wilcoxon signed rank test for one sample.

Accepted Answer

A Wilcoxon signed rank test is typically used to compare two related samples, and is not a method for testing autocollinearity (serial correlation) in a single sample. Other methods such as the Durbin-Watson test or the Breusch-Godfrey test are commonly used for this purpose.

Question 6

In general,the most important component of most time series is the

Accepted Answer

The trend component is the long-term pattern of the time series, representing its underlying direction. It is considered the most important component because it provides useful information about the overall behavior of the series and helps to identify changes and shifts in the series over time. The other components (cyclical, seasonal, and irregular) may also be important, but their effects are typically shorter-term and more limited in scope compared to the trend.

Question 7

Of the four components of the multiplicative time series model,the ratio-to-moving average procedure isolates the:

Accepted Answer

The ratio-to-moving-average method is specifically used to isolate the seasonal component in a time series by adjusting the data to remove the trend, thus allowing for the identification and measurement of seasonality.

Question 8

Which of the four time series components is more likely to exhibit the steady growth of the population of the United States from 1950 to 2000?

Accepted Answer

Steady growth over a long period of time is indicative of a trend component.

Question 9

The component of a time series that has repeating patterns that have a period longer than one year is the:

Accepted Answer

The cyclical component of a time series refers to patterns or fluctuations that occur over longer periods, typically more than a year. These are often associated with economic cycles, such as periods of expansion or recession, which do not have a fixed frequency like seasonal patterns.

Question 10

The analysis of time series data is useful in identifying past patterns and tendencies as well as helping to forecast future values.

Accepted Answer

Time series data analysis involves studying historical patterns and trends to make predictions about future behavior. Thus, the statement is true.

Question 11

The classical time series model combines the various components in which of the following ways?

Accepted Answer

The classical time series model combines the various components in the following way: $y = T \bullet C \cdot S \bullet I$, where $y$ is the dependent variable, $T$ is the trend component, $C$ is the cyclical component, $S$ is the seasonal component, and $I$ is the irregular component.

Question 12

The time series component that reflects a long-term,relatively smooth pattern or direction exhibited by a time series over a long time period (more than two years)is called:

Accepted Answer

A trend reflects long-term changes in a time series, typically over a period of more than two years. It is often relatively smooth and consistent, indicating a general direction or pattern in the data. Cyclical patterns, on the other hand, are shorter-term fluctuations that tend to repeat themselves over time (e.g. economic cycles). Seasonal patterns reflect regular, predictable changes that occur within a year (e.g. sales spikes during the holiday season). Random variation is the unpredictable, unsystematic fluctuations that occur within a time series.

Question 13

Different values of the smoothing constant employed in exponential smoothing cause the smoothing procedure to react more or less rapidly to changes in the value of a series.Which of the following smoothing constants causes the least rapid reaction to a change in the current value of a series?

Accepted Answer

The smoothing constant (alpha) in exponential smoothing determines how quickly the model reacts to changes in the series. A lower alpha value means the model reacts more slowly to recent changes, making the forecast more stable but less sensitive to recent changes. Among the given options, 0.10 is the lowest value, causing the least rapid reaction to changes.

Question 14

All index numbers are unit-less.

Accepted Answer

This is because index numbers represent the relative change or comparison between two quantities, and so they do not have any physical units.

Question 15

In autoregressive forecasting,each independent variable represents the value of the dependent variable for a previous time period.

Accepted Answer

In autoregressive forecasting models, each independent variable indeed represents the value of the dependent variable at a previous time step, making the model rely on its own past values for predictions.

Question 16

The purpose of the moving average technique is to

Accepted Answer

The moving average technique smooths out short-term seasonal and irregular variations to highlight the underlying trend and cyclical movements in the data.

Question 17

Selecting a large the number of periods (N)for a centered moving average

Accepted Answer

Selecting a larger number of periods for a centered moving average will result in greater dampening (choice A) and a less responsive forecast to directional changes (choice B). This is because the larger the value of N, the more data points are being averaged and the smoother the forecast. However, a smoother forecast may not be as accurate (choice C) as it may miss sudden changes in the data. Therefore, the best choice(s) for selecting a large number of periods for a centered moving average would be D, as it accurately reflects the effects of a higher N value.

Question 18

The effect that business recessions and prosperity have on time series values is an example of the:

Accepted Answer

Business recessions and prosperity are examples of the cyclical component of a time series, which represents the regular, periodic fluctuations in the data that occur at intervals longer than a year. The irregular component refers to unpredictable, one-time events that do not follow a pattern. The trend component represents the long-term direction of the data, while the seasonal component refers to regular patterns that occur within a year, such as the spike in retail sales during the holiday season.

Question 19

The time series component that reflects the irregular changes in a time series that are not caused by any other component,and tends to hide the existence of the other more predictable components,is called:

Accepted Answer

The random variation component reflects the unpredictable fluctuations in a time series that are not explained by any other component, such as measurement errors or unanticipated events. It can obscure the presence of the other more discernible components, making it difficult to isolate their effects.

Question 20

The time series component that reflects a wavelike pattern describing a long-term trend that is generally apparent over a number of years is called:

Accepted Answer

The description given in the question matches the definition of a cyclical component, which reflects a pattern that repeats over a long period of time, typically several years. The trend component represents a long-term direction of change, but not necessarily with a wavelike pattern, and is usually apparent over a much longer time horizon than a cyclical component. Seasonal components reflect regular patterns that occur within the span of a year, such as temperature or sales fluctuations by season. Random variation is the component of the time series that cannot be explained by any of the other components and is typically a result of chance or unforeseen events.

Quiz 18: Models for Time Series and Forecasting