Use the Following to Answer Questions

question 28

Multiple Choice

Use the following to answer questions
A researcher is interested in forecasting the house price index in Country Z. The observed price index values from 1996 to 2000 are 101, 103 104, 107 and 111. The researcher uses two different forecasting models, A and B. The forecasts for the price index using Model A are 100.5, 102.4, 103.2, 106 and 111 whilst the forecast using Model B are 100.8, 102.2, 104, 104.2 and 112.1.
-Based on the MAE and MSE forecast evaluation metrics, which of these statements are true?

• A) Model A outperforms Model B at forecasting the house price index
• B) Model A underperforms Model B at forecasting the house price index
• C) Model A and Model B perform equally well at forecasting the house price index
• D) We cannot tell which model does best