Time-series models may exhibit seasonal effects or cyclical effects. A seasonal effect differs from a cyclical effect in that a seasonal effect:
A) has no trend, is relatively constant, and only exhibits random behavior.
B) describes ups and downs over a time frame such as several years.
C) is one that repeats at fixed intervals of time, typically a year, month, week, or day.
D) is based on analysis of historical time-series data and are predicated on the assumption that the future is an extrapolation of the past.

Question

Quizplus · Accepted Answer

A seasonal effect is one that repeats at fixed intervals of time, typically a year, month, week, or day. This is different from a cyclical effect which describes ups and downs over a time frame such as several years. Option A is incorrect because seasonal effects can exhibit a trend and are not necessarily constant. Option B is incorrect because it describes a cyclical effect, not a seasonal effect. Option D is incorrect because it describes time-series models in general, not specifically seasonal effects.

Time-Series Models May Exhibit Seasonal Effects or Cyclical Effects