Question 1
Sometimes distinct patterns around a trend line can be caused by
◦ poor underlying data.
◦ dummy variables.
◦ seasonal variation.
◦ statistical anomalies.
Question 2
When using extrapolation to forecast,
◦ a time series of past observations is used.
◦ there is a large error term in the results.
◦ predictions can only be made about the future.
◦ dummy variables can skew the results.