TABLE 16-13 A Local Store Developed a Multiplicative Time-Series Model to Forecast

question 134

Multiple Choice

TABLE 16-13
A local store developed a multiplicative time-series model to forecast its revenues in future quarters, using quarterly data on its revenues during the 4-year period from 1998 to 2002. The following is the resulting regression equation:
log₁₀Y^{^} = 6.102 + 0.012 X - 0.129 Q₁ - 0.054 Q₂ + 0.098 Q₃
where
Y^{^} is the estimated number of contracts in a quarter
X is the coded quarterly value with X = 0 in the first quarter of 1998.
Q₁ is a dummy variable equal to 1 in the first quarter of a year and 0 otherwise.
Q₂ is a dummy variable equal to 1 in the second quarter of a year and 0 otherwise.
Q₃ is a dummy variable equal to 1 in the third quarter of a year and 0 otherwise.
-Referring to Table 16-13, to obtain a forecast for the fourth quarter of 1999 using the model, which of the following sets of values should be used in the regression equation?

• A) X = 8, Q₁ = 1, Q₂ = 0, Q₃ = 0
• B) X = 7, Q₁ = 0, Q₂ = 0, Q₃ = 0
• C) X = 8,Q₁ = 0, Q₂ = 0, Q₃ = 0
• D) X = 7, Q₁ = 1, Q₂ = 0, Q₃ = 0

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Definitions:

Positive

Characterized by the presence of something rather than its absence; in economics, often used to describe factual statements or analysis.

Unemployment

The situation when individuals who are capable of working are unable to find a job.

Normative

Relating to principles or rules of right conduct or the distinction between right and wrong; ethical.

Minimum Wage

The lowest legal salary that employers can pay workers, intended to protect workers from unduly low pay.