Question 1

A major drawback of the aggregate price index is that
A) it does not take into account the fact that some items in the market basket are purchased more frequently than others.
B) it is difficult to compute.
C) it is computed by using the values from a single time series or based on a single product.
D) percentage comparisons cannot be made to the base year.

Accepted Answer

The major drawback of the aggregate price index is that it does not take into account the fact that some items in the market basket are purchased more frequently than others. This can lead to an overestimation or underestimation of the true inflation rate.

Question 2

Since a(n)____________ index employs the base-period quantities in all succeeding periods,it allows for ready comparisons for identical quantities of goods purchased between the base period and all succeeding periods.
A) simple
B) aggregate
C) Laspeyres
D) Paasche
E) quantity

Accepted Answer

The Laspeyres index uses the base-period quantities as weights to determine the value of a fixed basket of goods in different periods. This allows for easy comparisons of identical quantities of goods purchased between the base period and all succeeding periods.

Question 3

In the multiplicative decomposition method,the centered moving averages provide an estimate of
A) trend × seasonal.
B) trend × cycle.
C) seasonal × cycle.
D) trend × irregular.
E) seasonal × irregular.

Accepted Answer

The centered moving averages provide an estimate of trend × cycle in the multiplicative decomposition method.

Question 4

The ___________ component of a time series consists of erratic and unsystematic fluctuations in the time series data.
A) trend
B) seasonal
C) cyclical
D) irregular

Accepted Answer

The irregular component of a time series consists of random and unsystematic fluctuations in the data that are caused by external factors such as unexpected events or measurement errors. The trend component represents a long-term pattern in the data, the seasonal component represents regular patterns that occur within a year, and the cyclical component represents patterns that occur over a time span longer than a year but are not necessarily regular.

Question 5

Suppose that the unadjusted seasonal factor for the month of April is 1.10.The sum of the 12 months' unadjusted seasonal factor values is 12.18.The normalized (adjusted)seasonal factor value for April
A) is larger than 1.1.
B) is smaller than 1.1.
C) is equal to 1.1.
D) cannot be determined with the information provided.

Accepted Answer

Since the sum of the 12 months' unadjusted seasonal factor values is 12.18, the average unadjusted seasonal factor value is 12.18/12 = 1.015. To normalize the seasonal factor for April, we divide the unadjusted seasonal factor for April (1.1) by the average unadjusted seasonal factor value (1.015), which gives us a normalized seasonal factor value of approximately 1.085. Since 1.085 is smaller than 1.1, the correct answer is B.

Question 6

The demand for a product for the last six years has been 15,15,17,18,20,and 19.The manager wants to predict the demand for this time series using the following simple linear trend equation: tr_t = 12 + 2t.Use this equation to forecast the demand for this product,and then calculate the MAD. A) MAD = 1.333 B) MAD = 1.6 C) MAD = 2.0 D) MAD = 2.333 E) MAD = 2.5

Accepted Answer

XYZ Company, Annual Data
 11ead627_0a0d_daf7_93a1_3d8d54c1e7a0_TB7056_00 MAD = (|1| + |−1| + |−1| + |−2| + |−2| + |−5|)/6 = 12/6 = 2

Question 7

When the moving average method is used to estimate the seasonal factors with quarterly sales data,a ______ period moving average is used.
A) 2
B) 3
C) 4
D) 5
E) 8

Accepted Answer

When using quarterly data, seasonal factors are typically estimated using a 4-period moving average. This means that the seasonal factor for each quarter is calculated as the average of that quarter's sales over the past 4 years. Using a longer or shorter moving average can result in over-smoothing or under-smoothing the seasonal pattern, respectively. Therefore, a 4-period moving average is the best choice for estimating seasonal factors with quarterly sales data.

Question 8

A sequence of values of some variable or composite of variables taken at successive,uninterrupted time periods is called a
A) least squares (linear)trend line.
B) moving average.
C) cyclical component.
D) time series.
E) seasonal factor.

Accepted Answer

A time series is a sequence of values of a variable or composite of variables taken at successive, uninterrupted time periods. The other options are components or methods used to analyze time series.

Question 9

The demand for a product for the last six years has been 15,15,17,18,20,and 19.The manager wants to predict the demand for this time series using the following simple linear trend equation: tr_t = 12 + 2t.What are the forecast errors for the 5th and 6th years? A) 0,−3 B) 0,+3 C) +2,+5 D) −2,−5 E) −1,−4

Accepted Answer

Using the trend equation, we can forecast the demand for the 5th and 6th years as follows: t = 5: tr_t = 12 + 2(5) = 22 t = 6: tr_t = 12 + 2(6) = 24 The actual demand for the 5th and 6th years is 20 and 19, respectively. Therefore, the forecast errors are: t = 5: 20 - 22 = -2 t = 6: 19 - 24 = -5 Thus, the best choice is D.

Question 10

Which of the following time series forecasting methods would not be used to forecast a time series that exhibits a linear trend with no seasonal or cyclical patterns?
A) dummy variable regression
B) linear trend regression
C) Holt-Winters double exponential smoothing
D) multiplicative Winters method
E) both dummy variable regression and multiplicative Winters method

Accepted Answer

Dummy variable regression and multiplicative Winters method would not be used to forecast a time series that exhibits a linear trend with no seasonal or cyclical patterns.

Question 11

The demand for a product for the last six years has been 15,15,17,18,20,and 19.The manager wants to predict the demand for this time series using the following simple linear trend equation: tr_t = 12 + 2t.Use this equation to forecast the demand for this product,and then calculate the MSD. A) MSD = 6 B) MSD = 3.3333 C) MSD = 7.0 D) MSD = 2 E) MSD = 2.4

Accepted Answer

XYZ Company, Annual Data
 11ead627_0a0d_b3e6_93a1_eb9a1335e1fc_TB7056_00 MSD = (1 + 1 + 1 + 4 + 4 + 25)/6 = 36/6

Question 12

The ________ component of a time series measures the fluctuations in a time series due to economic conditions of prosperity and recession with a duration of approximately 2 years or longer.
A) trend
B) seasonal
C) cyclical
D) irregular

Accepted Answer

The cyclical component of a time series measures fluctuations that occur due to economic conditions of prosperity and recession with a duration of approximately 2 years or longer. The trend component measures long-term changes in the series, while the seasonal component measures fluctuations that occur regularly within a year. The irregular component represents random fluctuations or noise that cannot be attributed to any specific factor.

Question 13

The ___________ component of a time series refers to the erratic time series movements that follow no recognizable or regular pattern.
A) trend
B) seasonal
C) cyclical
D) irregular

Accepted Answer

The irregular component of a time series refers to random or unpredictable fluctuations that cannot be attributed to any known factor or pattern. It is also known as the residual or noise. The other components, trend, seasonal, and cyclical, all show some degree of regularity or systematic patterns.

Question 14

Which of the following time series forecasting methods would not be used to forecast seasonal data?
A) dummy variable regression
B) simple exponential smoothing
C) time series decomposition
D) multiplicative Winters method

Accepted Answer

Simple exponential smoothing does not take into account seasonal patterns in the data and cannot be used for forecasting seasonal data. Dummy variable regression, time series decomposition, and multiplicative Winters method are all methods that consider seasonal patterns in the data.

Question 15

Those fluctuations that are associated with climate,holidays,and related activities are referred to as __________ variations.
A) trend
B) seasonal
C) cyclical
D) irregular

Accepted Answer

Seasonal variations refer to fluctuations that occur regularly throughout the year in a predictable manner, such as changes in weather patterns, holiday celebrations, and seasonal activities like agriculture and tourism. Trend variations refer to long-term changes in a particular direction, while cyclical variations refer to repeating patterns of ups and downs over a period of time. Irregular variations are unpredictable and do not fit into any specific pattern.

Question 16

When using simple exponential smoothing,the value of the smoothing constant α cannot be
A) negative.
B) greater than zero.
C) greater than 1.
D) .99.
E) negative or greater than 1.

Accepted Answer

The value of the smoothing constant α can only be a value between 0 and 1, inclusive.

Question 17

In general,the number of dummy variables used to model constant seasonal variation is equal to the number of
A) seasons.
B) seasons minus 1.
C) seasons plus 1.
D) seasons minus 2.
E) seasons divided by two.

Accepted Answer

When modeling constant seasonal variation with dummy variables, we use one less dummy variable than the number of seasons. This is because the first season is considered the reference category and we only need to include separate variables for the remaining seasons. For example, if there are four seasons (spring, summer, fall, and winter), we would use three dummy variables representing summer, fall, and winter, with spring being the reference category.

Question 18

The ___________ component of a time series reflects the long-run decline or growth in a time series.
A) trend
B) seasonal
C) cyclical
D) irregular

Accepted Answer

The trend component of a time series reflects the long-run decline or growth in a time series. This component can be identified by smoothing the data over a long period of time.

Question 19

When the magnitude of the seasonal swing does not depend on the level of a time series,we call this _________ variation.
A) increasing seasonal
B) cyclical seasonal
C) constant seasonal
D) decreasing seasonal
E) no seasonal

Accepted Answer

When the magnitude of the seasonal swing does not depend on the level of a time series, it is called constant seasonal variation.

Question 20

When there is _______________ seasonal variation,the magnitude of the seasonal swing does not depend on the level of the time series.
A) cyclical
B) constant
C) irregular
D) increasing

Accepted Answer

When there is a constant seasonal variation, the magnitude of the seasonal swing remains the same regardless of the level of the time series.

Quiz 15: Multiple Regression and Model Building

A major drawback of the aggregate price index is that

Since a(n) ____________ index employs the base-period quantities in all succeeding periods,it allows for ready comparisons for identical quantities of goods purchased between the base period and all succeeding periods.

In the multiplicative decomposition method,the centered moving averages provide an estimate of

The ___________ component of a time series consists of erratic and unsystematic fluctuations in the time series data.

Suppose that the unadjusted seasonal factor for the month of April is 1.10.The sum of the 12 months' unadjusted seasonal factor values is 12.18.The normalized (adjusted) seasonal factor value for April

The demand for a product for the last six years has been 15,15,17,18,20,and 19.The manager wants to predict the demand for this time series using the following simple linear trend equation: tr_t = 12 + 2t.Use this equation to forecast the demand for this product,and then calculate the MAD.

When the moving average method is used to estimate the seasonal factors with quarterly sales data,a ______ period moving average is used.

A sequence of values of some variable or composite of variables taken at successive,uninterrupted time periods is called a

The demand for a product for the last six years has been 15,15,17,18,20,and 19.The manager wants to predict the demand for this time series using the following simple linear trend equation: tr_t = 12 + 2t.What are the forecast errors for the 5th and 6th years?

Which of the following time series forecasting methods would not be used to forecast a time series that exhibits a linear trend with no seasonal or cyclical patterns?

The demand for a product for the last six years has been 15,15,17,18,20,and 19.The manager wants to predict the demand for this time series using the following simple linear trend equation: tr_t = 12 + 2t.Use this equation to forecast the demand for this product,and then calculate the MSD.

The ________ component of a time series measures the fluctuations in a time series due to economic conditions of prosperity and recession with a duration of approximately 2 years or longer.

The ___________ component of a time series refers to the erratic time series movements that follow no recognizable or regular pattern.

Which of the following time series forecasting methods would not be used to forecast seasonal data?

Those fluctuations that are associated with climate,holidays,and related activities are referred to as __________ variations.

When using simple exponential smoothing,the value of the smoothing constant α cannot be

In general,the number of dummy variables used to model constant seasonal variation is equal to the number of

The ___________ component of a time series reflects the long-run decline or growth in a time series.

When the magnitude of the seasonal swing does not depend on the level of a time series,we call this _________ variation.

When there is _______________ seasonal variation,the magnitude of the seasonal swing does not depend on the level of the time series.