# Time Series Analysis: MCQs & Short Problems

Question 1.

If the errors produced by a forecasting method for 3 observations are +3, +3 and -3, then what is the mean absolute deviation?

Answer

9

0

3

-3

Question 2

If the errors produced by a forecasting method for 3 observations are +3, +3 and -3, then what is the mean squared error?

Answer

9

0

3

-3

Question 3

A restaurant has been experiencing higher sales during the weekends of compared to the weekdays. Daily restaurant sales patterns for this restaurant over a week are an example of _________ component of time series.

Answer

Trend

Seasonal

Cyclical

Irregular

Question 4

_________ component of time series refers to the erratic time-series movement that follow no recognizable or regular pattern.

Answer

Trend

Seasonal

Cyclical

Irregular

Question 5

The demand for a product for the last six years has been 15, 15, 17, 18, 20, and 19. The manager wants to predict the demand for this time series using the following simple linear trend equation: trt = 12 + 2t. What are the forecast errors for the 5th and 6th years?

Answer

0, -3

0, +3

+2, +5

-2, -5

Question 6

In general, the number of dummy variables used to model constant seasonal variation is equal to the number of

Answer

seasons

seasons minus 1

seasons plus 1

seasons minus 2

Question 7

When the magnitude of the seasonal swing does not depend on the level of a time series, we call this _________ variation.

Answer

Increasing seasonal

Cyclical seasonal

Constant seasonal

Decreasing seasonal

Question 8

When a forecaster uses the _________________ method she or he assumes that the time series components are changing quickly over time.

Answer

Time series regression

Simple exponential smoothing

Box and Jenkins method

Multiplicative decomposition method

Question 9

A major drawback of the aggregate price index is that

Answer

It does not take into account the fact that some items in the market basket are purchased more frequently than others.

It is difficult to compute.

It is computed by using the values from a single time series or based on a single product.

Percentage comparisons cannot be made to the base year.

Question 10

Which of the following time-series forecasting methods would not be used to forecast a time series that exhibits a linear trend with no seasonal or cyclical patterns?

Answer

Dummy variable regression

Linear trend regression

Holt Winter's double exponential smoothing

Multiplicative Winter's method

Both A and D

Question 11

Use the following to answer the questions:

Week Revenue Forecasted Revenue

1 200 225

2 240 220

3 300 285

4 270 290

5 230 250

6 260 240

7 210 250

8 275 240

a. Compute the total error (sum of the error terms).

b. Compute the mean squared error (deviation).

Answer

Question 12

The linear trend equation for the following data is ŷ=1.4286+2.5(t)

Month Value of Fund

1 4

2 6

3 9

4 12

5 14

6 16

7 19

a. What is the predicted value of the fund in the period t=1?

b. What is the predicted value of the fund in the period 3, and period 7?

c. Find the residual values (error) for period 3, and period 7.

#### Solution Summary

The solution provides answers to multiple choice questions on time series analysis and step by step method for the calculation of trend for a time series model. Formula for the calculation and Interpretations of the results are also included. Relevant workings for multiple choice questions are also included.