Think About It
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A five−term average is smoother because it averages more values.
Less averaging that can be done at the ends of the time series.
The time series is no longer centered.
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$250,000.
Return to the mean. The forecast is $290,000.
The forecast calls for an increase if the current value is less than the mean and for a decrease if it's greater.
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The EWMA with less smoothing, w = 0.5 in order to follow the recent downward trend.
Pick the EWMA with w = 0.9 because it removes more of the irregular variation while following the trend.
The SD of deviations from the EWMA in the last few years is about 0.5%. Using ±2 SDs, a range for GNP is 15.79(0.99) ≈ 15.63 to 15.79(1.01) ≈ 15.95.
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Small, negative correlation; close to ...
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