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 - - - + + + + - - -.

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