Which is a characteristic of an additive (as opposed to multiplicative) time-series model?
A)Appropriate for financial data over a longer time period
B)Appropriate for rapidly growing financial data
C)Appropriate for data that vary by an order of magnitude
D)Appropriate for short-term data with a steady dollar growth

Question

Quizplus · Accepted Answer

An additive time-series model is appropriate for short-term data with a steady dollar growth. In this type of model, the trend component is added to the seasonal and error components. It is useful when the changes in the data are constant and not proportional. Additive models work best when the magnitude of the seasonal fluctuations in the data is relatively constant over time. Options A and B are incorrect because neither are characteristics of additive models, while option C is an unclear statement that could apply to either an additive or multiplicative model.

Which Is a Characteristic of an Additive (As Opposed to Multiplicative)