Which of the following is true of the linear trend model?
A) It assigns exponentially decreasing weights to older observations.
B) It is a causal forecasting model.
C) It can extract a long-term upward or downward steady movement in a series.
D) It is used when a series involves only random fluctuations.

Question

Quizplus · Accepted Answer

The linear trend model is useful for extracting a long-term upward or downward movement in a time series. It assumes that the trend is linear, with a constant rate of change. It does not assign exponentially decreasing weights to older observations, and it is not a causal forecasting model. It can be used even when a series involves random fluctuations, as long as there is a clear underlying trend.

Which of the Following Is True of the Linear Trend