Explain why it is not wise to forecast a trend very far into the ...

[schs14]

Explain why it is not wise to forecast a trend very far into the future.

Question 2

Name two questions you should ask to avoid being misled when reading time series data.

[ghepp]

Answer to Question 1

WHAT APPEARS AS A TREND IN A SHORTER TIME SERIES MAY ACTUALLY BE PART OF A CYCLE IN A LONGER TIME SERIES.

Answer to Question 2

ANY TWO OF THE FOLLOWING ARE OK: 1) ARE THE TIME PERIODS EQUALLY SPACED? 2) IS THE SERIES ADJUSTED FOR INFLATION? 3) ARE THE VALUES SEASONALLY ADJUSTED? 4) IS THE TIME LINE LONG ENOUGH? 5) IS THERE AN UPWARD OR DOWNWARD TREND? 6) ARE THERE OTHER SEASONAL COMPONENTS THAT HAVE NOT BEEN REMOVED? 7) ARE THERE SMOOTH CYCLES?