Chapter 16Time Series and ForecastingTrue/False1. A time series is a collection of data recorded over a period of time, usually monthly, quarterly, or yearly. Difficulty: Easy Goal: 1 AACSB: AS2. Long-term forecasts are usually from one year to more than 10 years into the future. Difficulty: Easy Goal: 1 3. A forecast is necessary to plan for the raw materials, production facilities, and staff required to meet estimated future demands. Difficulty: Easy Goal: 1 4. One component of a time series is the secular trend that is the smooth movement of a series over a short period of time, such as a few months or quarters. Difficulty: Easy Goal: 1 AACSB: AS5. A time series may a recurring pattern called seasonality. Difficulty: Easy Goal: 1 6. One component of a time series is cyclical variation. An example of cyclical variation is the business cycle that consists of periods of prosperity followed by periods of recession, depression, and recovery. Difficulty: Easy Goal: 1 AACSB: AS7. Episodic and residual variations can be projected into the future. Difficulty: Easy Goal: 1 8. In a time series analysis, the letter "a" in the linear trend equation is the value of ˆYwhen t = 0. Difficulty: Easy Goal: 2 9. In the linear trend equation, the letter "b" is the average change in tfor each change of one unit (either increase or decrease) in Y. Difficulty: Easy Goal: 2 Statistical Techniques in Business & Economics, Lind/Marchal/Wathen, 13/e13

10. In the linear trend equation, the letter "b" is the average change in Yfor each change of one unit (either increase or decrease) in t. Difficulty: Easy Goal: 2 11. In a linear trend equation, tis a coded value that corresponds with a time period in a time series. Difficulty: Easy Goal: 2 AACSB: AS12. The least squares method of computing the equation for a straight line going through the data of interest gives the "best fitting" line. Difficulty: Easy Goal: 2 13. If the sales, production or other data over a period of time tend to approximate a straight-line trend, the equation developed by the least squares method cannot be used to forecast sales for a future period. Difficulty: Easy Goal: 2 14. The moving average method merely smoothes out the fluctuations in the data. Difficulty: Easy Goal: 3 AACSB: AS15. The moving average method averages out seasonal and irregular components. Difficulty: Medium Goal: 3 16. To apply the moving average method to a time series, the data should follow a linear trend and have adefinite rhythmic pattern of fluctuations that repeat (say, every three years). Difficulty: Medium Goal: 3 17. Sales, production and other economic and business series usually have periods of oscillation that are of equal length or identical amplitudes.