Which of the following models is considered for a quarterly time series that seems to change on average by a fixed amount and seems to have seasonality?

Question

Quizplus · Accepted Answer

Model B is a linear model with a fixed intercept and regression coefficients for each season. This model is appropriate for a quarterly time series that seems to change by a fixed amount with seasonality. The seasonality component is captured by including dummy variables d₁, d₂, and d₃ which represent the three quarters in each year. The intercept captures the overall level of the time series. Model A includes a logarithmic transformation of the dependent variable, which is not necessary for a time series with fixed changes over time and seasonality. Model C and D include multiplicative transformations of the dependent variable, which are not appropriate for this type of time series.

Which of the Following Models Is Considered for a Quarterly