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SCENARIO 16-13
Given below is the monthly time series data for U.S.retail sales of building materials over a specific year.
The results of the linear trend,quadratic trend,exponential trend,first-order autoregressive,second-order autoregressive and third-order autoregressive model are presented below in which the coded month for the 1st month is 0:
Linear trend model:
Quadratic trend model:
Third-order autoregressive::
Below is the residual plot of the various models:
-Referring to Scenario 16-13,you can conclude that the third-order autoregressive model is appropriate at the 5% level of significance.
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