Sulsa Inc Uses Fundamental Forecasting

question 16

Multiple Choice

Sulsa Inc. uses fundamental forecasting. Using regression analysis, it has determined the following equation for the euro: euro_t
= b₀ + b₁INF_{t - 1} + b₂INC_{t - 1}
​
= ) 005 + .9INF_{t - 1} + 1.1INC_{t - 1}
​
The most recent quarterly percentage change in the inflation differential between the United States and Europe was 2 percent, while the most recent quarterly percentage change in the income growth differential between the United States and Europe was -1 percent. Based on this information, the forecast for the euro is a(n) ____ of ____ percent.

• A) appreciation; 3.4
• B) depreciation; 3.4
• C) appreciation; 0.7
• D) appreciation; 1.2

---

Definitions:

Shaping

A method of learning that uses rewards to reinforce behaviors that gradually approximate the desired behavior.

Operant Conditioning

A learning process in which the consequences of an action determine the likelihood of it being repeated, influenced by reinforcement or punishment.

Captured Soldiers

Military personnel who have been taken prisoner by an opposing force.

Variable Interval

A reinforcement schedule that rewards a response at random time intervals, without a predictable pattern.