If a time series exhibits an increasing trend, simple exponentially smoothed forecast will
A) lag the trend
B) be too low
C) lead the trend
D) be too high
E) A and B

Question

Quizplus · Accepted Answer

Simple exponentially smoothed forecasts are designed to smooth out fluctuations in data to identify trends. However, they are based on past data and do not anticipate future trends. Therefore, if a time series exhibits an increasing trend, the forecast will lag behind the actual trend because it is reacting to past data, making the forecasted values too low compared to the actual values.

If a Time Series Exhibits an Increasing Trend, Simple Exponentially