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Questions and Answers
What is the purpose of the dummy variable D in the sales forecasting model?
What is the purpose of the dummy variable D in the sales forecasting model?
- To control for the effect of the first quarter on sales
- To account for the second quarter's deviation from the overall trend (correct)
- To estimate the sales for the entire year
- To capture the seasonal fluctuations in sales
What is the time period for which the quarterly data is used to estimate the sales forecasting model?
What is the time period for which the quarterly data is used to estimate the sales forecasting model?
- 2000 I - 2005 III
- 2010 I - 2015 III
- 2005 I - 2015 III (correct)
- 2005 I - 2010 IV
At the 1 percent level of significance, what can be concluded about the trend in sales?
At the 1 percent level of significance, what can be concluded about the trend in sales?
- The trend in sales cannot be determined from the given information
- There is a statistically significant downward trend in sales
- There is no statistically significant trend in sales (correct)
- There is a statistically significant upward trend in sales
What is the value of the dummy variable D in the first quarter?
What is the value of the dummy variable D in the first quarter?
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How many observations are used to estimate the sales forecasting model?
How many observations are used to estimate the sales forecasting model?
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Study Notes
Sales Forecasting Model
- The consulting firm uses a quarterly sales forecasting model in the form of Qt = a + bt + cD, where Qt is the quarterly sales and t is the time period.
Model Estimation
- The model is estimated using quarterly data from 2005 I to 2015 III, which covers 43 time periods (t = 1, ..., 43).
Dummy Variable
- The variable D is a dummy variable that represents the second quarter, with a value of 1 in the second quarter and 0 otherwise.
Estimation Results
- (Note: The estimation results are not provided, but the question asks about the significance of the trend in sales at the 1% level.)
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