Instruction 14-4
a Contractor Developed a Multiplicative Time-Series Model to Forecast

question 62

Multiple Choice

Instruction 14-4
A contractor developed a multiplicative time-series model to forecast the number of contracts in future quarters,using quarterly data on number of contracts during the 3-year period from 2008 to 2010.The following is the resulting regression equation:
$\log _ { 10 } \hat { Y } = 3.37 + 0.117 X - 0.083 Q _ { 1 } + 1.28 Q _ { 2 } + 0.617 Q _ { 3 }$
Where
$$\hat { Y }$$ is the estimated number of contracts in a quarter
X is the coded quarterly value with X = 0 in the first quarter of 2008.
Q₁ is a dummy variable equal to 1 in the first quarter of a year and 0 otherwise.
Q₂ is a dummy variable equal to 1 in the second quarter of a year and 0 otherwise.
Q₃ is a dummy variable equal to 1 in the third quarter of a year and 0 otherwise.
-Referring to Instruction 14-4,using the regression equation,which of the following values is the best forecast for the number of contracts in the third quarter of 2011?

• A)133,352
• B)421,697
• C)49,091
• D)1,482,518

---

Definitions:

Decreasing Rate

A condition in which the rate or speed of a given process or phenomenon reduces over time.

Increasing Rate

A rate that accelerates or grows over time, often used in the context of compound interest, inflation, or the escalation of prices.

Marginal

Relating to the additional cost or benefit associated with producing one more unit of a good or service.

Incremental

Relating to a small or gradual change or increase, often considered in the context of adjustments or improvements.