A Time Series Regression Equation Measuring the Number of Surfboards

question 59

Multiple Choice

A time series regression equation measuring the number of surfboards sold by a surfboard manufacturing company in Australia is given below:
Y = 35 + 4Q₁ + 0.5Q₃ + 8Q₄ + 3t
With t in quarters and the origin is December 2010 and Q₁ is the indicator variable for March, Q₃ is the indicator variable for September and Q₄ is the indicator variable for December.
Which of the following statements is correct?

• A) The coefficients of the indicator variables are all positive because the June Quarter has the lowest sales of surfboards.
• B) The coefficients of the indicator variables are all positive because sales of surfboards in the March, September and December quarter are all above June.
• C) The coefficients of the indicator variables are all positive indicating that the June quarter is seasonally disadvantaged for selling surfboards due to winter in Australia in this quarter.
• D) All of these choices are correct.

Apply the method of difference to identify causal relationships.

Analyze the role of disconfirming evidence in strengthening generalizations.

Understand how the method of concomitant variations contributes to identifying causal relations.

Apply the method of residues to infer additional causal factors in complex scenarios.

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Definitions:

Regressive

This term usually applies to a tax system where the tax rate decreases as the taxable amount increases, placing a higher relative burden on lower-income earners.

Bush Tax Cuts

A series of temporary income tax relief measures enacted by President George W. Bush in 2001 and 2003, aimed at stimulating the US economy.

Percentage Tax Rate

The portion of one's income or the cost of a transaction that must be paid as tax, expressed as a percentage.

Federal Personal Income Tax

A tax levied by the federal government on the annual income of individuals, households, and other legal entities.