If We Fit a Linear Trend to 10 Observations on Time-Series

question 112

Multiple Choice

If we fit a linear trend to 10 observations on time-series data that are growing exponentially, then it is most likely that:

• A)the fitted trend will be too high at t = 1 and t = 10.
• B)the fitted trend will be too low in the middle.
• C)the forecasts (if extrapolated) will be too low.
• D)the residuals will show a pattern like - - - + + + + - - -.

---

Definitions:

Diminishing Marginal Utility

The principle stating that as a person consumes more of a good, the additional satisfaction derived from consuming an additional unit lessens.

Gift Registries

Lists created by individuals or couples indicating the gifts they wish to receive for a special occasion, such as a wedding or baby shower.

Cash Refunds

Payments made in cash to purchasers of goods or services, often as a result of overpayment or a promotional offer.

Gift-Giving Efficiency

The effectiveness and utility in the act of giving gifts, considering the satisfaction of the recipient and the resources used.