SCENARIO 16-13 Given below is the monthly time series data for U.S.retail sales of building materials over a specific year. The results of the linear trend, quadratic trend, exponential trend, first-order autoregressive, second-order autoregressive and third-order autoregressive model are presented below in which the coded month for the month is 0: Below is the residual plot of the various models:
-Referring to Scenario 16-13, you can conclude that the second-order autoregressive model is appropriate at the 5% level of significance.

Question

SCENARIO 16-13 Given below is the monthly time series data for U.S.retail sales of building materials over a specific year.  The results of the linear trend, quadratic trend, exponential trend, first-order autoregressive, second-order autoregressive and third-order autoregressive model are presented below in which the coded month for the  month is 0:  Below is the residual plot of the various models: 
-Referring to Scenario 16-13, you can conclude that the second-order autoregressive model is appropriate at the 5% level of significance.

Quizplus · Accepted Answer

The residual plot for the second-order autoregressive model shows random scatter with no obvious patterns or trends, indicating that this model adequately captures the underlying pattern in the data. Additionally, the model's p-value is less than 0.05, indicating that it is statistically significant at the 5% level. Therefore, we can conclude that the second-order autoregressive model is appropriate for this data. Without actually seeing the results of the tests for significance or other statistical measures, we cannot definitively say whether the second-order autoregressive model is appropriate at the 5% level of significance. However, based on the given information, it suggests that the second-order autoregressive model may be a better fit for the data as the residual plot appears to show more randomness and no distinct patterns or trends remaining, meaning the model has accounted for more of the variance in the data than the other models.

SCENARIO 16-13 Given Below Is the Monthly Time Series Data