Assigment 2

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  • Topic: Lagging indicator, Economic indicator, Forecasting
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Week 3 Homework Assignment - Chapter 5 and Chapter 6 (24 points)

Student Name: ___________________________________________

Chapter 05: (12 points)

____1.The forecasting technique which attempts to forecast short-run changes and makes use of economic indicators known as leading, coincident or lagging indicators is known as: (1point) a.econometric technique

b.time-series forecasting
c.opinion polling
d.barometric technique
e.judgment forecasting

____2.The variation in an economic time-series which is caused by major expansions or contractions usually of greater than a year in duration is known as: (1point) a.secular trend
b.cyclical variation
c.seasonal effect
d.unpredictable random factor
e.none of the above

____3.The type of economic indicator that can best be used for business forecasting is the: (1point) a.leading indicator
b.coincident indicator
c.lagging indicator
d.current business inventory indicator
e.optimism/pessimism indicator

____4.Which of the following barometric indicators would be the most helpful for forecasting future sales for an industry? (1point)

a.lagging economic indicators.
b.leading economic indicators.
c.coincident economic indicators.
d.wishful thinking
e.none of the above

____5.Examine the plot of data. (2 points)

It is likely that the best forecasting method for this plot would be: a.a two-period moving average
b.a secular trend upward
c.a seasonal pattern that can be modeled using dummy variables or seasonal adjustments d.a semi-log regression model
e.a cubic functional form

____6.Emma uses a linear model to forecast quarterly same-store sales at the local Garden Center. The results of her multiple regression is: (2 points)

Sales = 2,800 + 200 • T  350 • D

where T goes from 1 to 16 for each quarter of the year from the first quarter of 2006 ('06I) through the fourth quarter of 2009 ('09 IV). D is a dummy variable which is 1 if sales are in the cold and dreary first quarter, and zero otherwise, because the months of January, February, and March generate few sales at the Garden Center. Use this model to estimate sales in a store for the first quarter of 2010 in the 17th month; that is: {2010 I}. Emma's forecast should be: a.5,950

b.6,200
c.6,350
d.6,000
e.5,850

____7.If two alternative economic models are offered, other things equal, we would: (2 points) a.tend to pick the one with the lowest R2.
b.select the model that is the most expensive to estimate.
c.pick the model that was the most complex.
d.select the model that gave the most accurate forecasts
e.all of the above

____8.Mr. Geppetto uses exponential smoothing to predict revenue in his wood carving business. He uses a weight of  = .4 for the naïve forecast and (1  ) = .6 for the past forecast. What revenue did he predict for March using the data below? Select closest answer. (2 points)

MONTHREVENUEFORECAST
Nov100100
Dec 90100
Jan115
Feb110
MARCH??

a.106.2
b.104.7
c.103.2
d.102.1
e.101.7

Chapter 06: (12 Points- 2 points each)

____9.If the British pound (£) appreciates by 10% against the dollar: a.both the US importers from Britain and US exporters to Britain will be helped by the appreciating pound. b.the US exporters will find it harder to sell to foreign customers in Britain. c.the US importer of British goods will tend to find that their cost of goods rises, hurting its bottom line. d.both US importers of British goods and exporters to Britain will be unaffected by changes in foreign exchange rates. e.all of the above.

____10.If Ben Bernanke, Chair of the Federal Reserve Board, begins to tighten monetary policy by raising US interest rates next year, what is the likely impact on the value of the dollar? a.The value of the dollar falls when US interest rates rise. b.The value of the dollar rises when US...
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