In the multiplicative model, seasonal adjustment is made by dividing the value of y by S. Which of the following options is the correct formula for S?
A) S = 1 - (y-t)/t
B) S = 1 + (y+t)/t
C) S = 1+ (y-t)/t

Question

Quizplus · Accepted Answer

S = 1+ (y-t)/t is the correct formula for calculating the seasonal component (S) in the context of adjusting a time series for seasonality, especially when using a multiplicative model. This formula represents the adjustment factor where y is the original value, t is the trend component, and S is the seasonal component.

In the Multiplicative Model, Seasonal Adjustment Is Made by Dividing