Think About It

  1. 23.

    1. A five−term average is smoother because it averages more values.

    2. Less averaging that can be done at the ends of the time series.

    3. The time series is no longer centered.

  2. 25.

    1. $250,000.

    2. Return to the mean. The forecast is $290,000.

    3. The forecast calls for an increase if the current value is less than the mean and for a decrease if it's greater.

  3. 27.

    1. The EWMA with less smoothing, w = 0.5 in order to follow the recent downward trend.

    2. Pick the EWMA with w = 0.9 because it removes more of the irregular variation while following the trend.

    3. 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.

  4. 29.

    1. Small, negative correlation; close to ...

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