i. The moving average method merely smooths out the fluctuations in the data. ii. To apply the moving average method to a time series, the data should follow a linear trend and have a definite rhythmic pattern of fluctuations that repeat (say, every three years).
iii. Sales, production and other economic and business series usually have periods of oscillation that are of equal length or identical amplitudes.
A) (i), (ii), and (iii) are all correct statements.
B) (i) and (ii) are correct statements but not (iii).
C) (i) and (iii) are correct statements but not (ii).
D) (ii) and (iii) are correct statements but not (i).
E) (i), (ii), and (iii) are all false statements.

Question

Quizplus · Accepted Answer

Statement (i) is true because the moving average method does indeed smooth out fluctuations in data. Statement (ii) is also true because the moving average method is most effective when there is a clear trend and regular fluctuations. However, statement (iii) is not always true because economic and business series may not have regular periods of oscillation.

I the Moving Average Method Merely Smooths Out the Fluctuations