Consider the Following Time Series A Construct a Time Series Plot

question 14

Essay

Consider the following time series. $$\begin{array} { | c | c | } \hline \boldsymbol { t } & \boldsymbol { y } \boldsymbol { t } \\\hline 1 & 1,234 \\\hline 2 & 1,201 \\\hline 3 & 1,103 \\\hline 4 & 987 \\\hline 5 & 945 \\\hline 6 & 891 \\\hline 7 & 817 \\\hline 8 & 734 \\\hline\end{array}$$
a. Construct a time series plot. What type of pattern exists in the data?
b. Use simple linear regression analysis to find the parameters for the line that minimizes MSE for this time series.
c. What is the forecast for t = 9?

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Definitions:

Market Price

The price at which an asset or service is traded in the open market.

Treasury Bills

Short-term government securities issued at a discount from the face value and maturing at par, representing a form of borrowing by the government.

Real Rate Of Return

The annual percentage return realized on an investment, adjusted for changes in the price level due to inflation or other external factors.

Inflation

The speed at which the overall price level for goods and services increases, gradually diminishing the buying power.