Instruction 14-6
a Local Store Developed a Multiplicative Time-Series Model $$\log _ { 10 } \hat { Y } = 6.102 + 0.012 X - 0.129 Q _ { 1 } - 0.054 Q _ { 2 } + 0.098 Q _ { 3 }$$

question 21

Multiple Choice

Instruction 14-6
A local store developed a multiplicative time-series model to forecast its revenues in future quarters, using quarterly data on its revenues during the four-year period from 2005 to 2009. The following is the resulting regression equation:
$$\log _ { 10 } \hat { Y } = 6.102 + 0.012 X - 0.129 Q _ { 1 } - 0.054 Q _ { 2 } + 0.098 Q _ { 3 }$$
Where
$X$ is the coded quarterly value with $X = 0$ in the first quarter of 2005 .
$Q _ { 1 }$ is a dummy variable equal to 1 in the first quarter of a year and 0 otherwise.
$Q _ { 2 }$ is a dummy variable equal to 1 in the second quarter of a year and 0 otherwise.
$Q _ { 3 }$ is a dummy variable equal to 1 in the third quarter of a year and 0 otherwise.
-Referring to Instruction 14-6,to obtain a forecast for the fourth quarter of 2006 using the model,which of the following sets of values should be used in the regression equation?

• A) X = 8, Q₁ = 1, Q₂ = 0, Q₃ = 0
• B) X = 8, Q₁ = 0, Q₂ = 0, Q₃ = 0
• C) X = 7, Q₁ = 1, Q₂ = 0, Q₃ = 0
• D) X = 7, Q₁ = 0, Q₂ = 0, Q₃ = 0

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