Consider the Following Time Series

question 12

Essay

Consider the following time series:
a. Use a multiple regression model to develop an equation to account for linear trend and seasonal effects in the data. To capture seasonal effects, use the dummy variables Qtr1 = 1 if quarter 1, 0 otherwise; Qtr2 = 1 if quarter 2, 0 otherwise; Qtr3 = 1 if quarter 3, 0 otherwise; and create a variable t such that t = 1 for quarter 1 in year 1, t = 2 for quarter 2 in year 1, … ,t = 12 for quarter 4 in year 3.
b. Compute the quarterly forecasts for next year based on the model developed in part a.

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