Tag: moving averages

Questions Related to moving averages

The rise and fall of a time series over periods longer than one year is called

business mathematics and statistics moving averages introduction to time series introduction to time series and forecasting time series and forecasting uses of average in day-to-day life

  1. Secular trend

  2. Seasonal variation

  3. Cyclical variation

  4. Irregular variation

Show answer
Correct Option: C
Explanation:

$\Rightarrow$  The rise and fall of time series over periods longer than one year is called $Cyclical\,variation.$

$\Rightarrow$  Cyclical variations, which are also generally termed as business cycles, are the periodic movements. These variations in a time series are due to ups & downs recurring after a period from Season to Season.
$\Rightarrow$   Though they are more or less regular, they may not be uniformly periodic. These are oscillatory movements which are present in any business activity and is termed as business cycle.
$\Rightarrow$  It has got four phases consisting of prosperity (boom), recession, depression and recovery. All these phases together may last from 7 to 9 years may be less or more.

The secular trend is measured by the method of semi-averages when:

business mathematics and statistics moving averages introduction to time series introduction to time series and forecasting time series and forecasting uses of average in day-to-day life

  1. Time series based on yearly values

  2. Time series consists of even number of values

  3. Trend is linear

  4. None of them

Show answer
Correct Option: C
Explanation:

$\Rightarrow$  The secular trend is measured by the method of semi-averages when : $Trend\,is\,linear.$

$\Rightarrow$  Under this method the whole time series data is classified into two equal parts and the averages for each half are calculated. If the data is for even number of years, it is easily divided into two.
$\Rightarrow$   If the data is for odd number of years, then the middle year of the time series is left and the two halves are constituted with the period on each side of the middle year.
$\Rightarrow$  The arithmetic mean for a half is taken to be representative of the value corresponding to the midpoint of the time interval of that half. Thus we get two points. 

$\Rightarrow$  These two points are plotted on a graph and then are joined by straight line which is our required trend line.

Increased demand of admission in the subject of computer in Pakistan is:

business mathematics and statistics moving averages introduction to time series introduction to time series and forecasting time series and forecasting uses of average in day-to-day life

  1. Secular trend

  2. Cyclical trend

  3. Seasonal trend

  4. Irregular trend

Show answer
Correct Option: A
Explanation:

$\Rightarrow$  Increased demand of admission in the subject of computer in Pakistan is : $Secular\, trend$.

$\Rightarrow$  Secular trend is be long-term tendency of the time series to move on upward or downward direction.
$\Rightarrow$  It indicates how on the whole behaved over the entire period under reference. These are result of long term forces that gradually operate on the time series variable.
$\Rightarrow$  Most of the time series relating to Economic, Business and Commerce might show an upward tendency in case of population, production & sales of products, incomes, prices; or downward tendency might be noticed in time series relating to share prices, death, birth rate etc. due to global melt down, or improvement in medical facilities etc. All these indicate trend.

The fire in a factory is an example of

business mathematics and statistics moving averages introduction to time series introduction to time series and forecasting time series and forecasting

  1. Secular trend

  2. Seasonal movements

  3. Cyclical variations

  4. Irregular variations

Show answer
Correct Option: D
Explanation:

$\Rightarrow$  The fire in factory is an example of $Irregular\, variations.$

$\Rightarrow$  Irregular variations which occur on account of random external events.
$\Rightarrow$ These variations either go very deep downward or too high upward to attain peaks abruptly.
$\Rightarrow$  They do not have any definite pattern and it cannot be predicted in advance. These variations are due to floods, wars, famines, earthquakes, strikes, lockouts, epidemics etc.

Wheat crops badly damaged on account of rains is

business mathematics and statistics moving averages introduction to time series introduction to time series and forecasting time series and forecasting uses of average in day-to-day life

  1. Cyclical movement

  2. Random movement

  3. Secular trend

  4. Seasonal movement

Show answer
Correct Option: B
Explanation:

$\Rightarrow$  Wheat crops badly damaged on account of rains is $Random\, movement$

$\Rightarrow$  Random movement which occur on account of irregular external events.
$\Rightarrow$  These variations either go very deep downward or too high upward to attain peaks abruptly. These fluctuations are a result of unforeseen and unpredictably forces which operate in absolutely random or erratic manner.
$\Rightarrow$  They do not have any definite pattern and it cannot be predicted in advance. These variations are due to floods, wars, famines, earthquakes, strikes, lockouts, epidemics etc.

Moving average method is used for measurement of trend when:

business mathematics and statistics moving averages introduction to time series introduction to time series and forecasting time series and forecasting uses of average in day-to-day life

  1. Trend is linear

  2. Trend is non linear

  3. Trend is curvilinear

  4. None of them

Show answer
Correct Option: A
Explanation:

$\Rightarrow$  Moving average method is used for measurement of trend when : $Trend\, is\,linear$.

$\Rightarrow$  In the method of moving average, successive arithmetic averages are computed from overlapping groups of successive values of a time series. Each group includes all the observations in a given time interval,termed as the period of moving average.
$\Rightarrow$  The next group is obtained by replacing the oldest value by thenext value in the series. The averages of such groups are known as the moving averages. The moving averages of a group are always shown at the center of its period.

In time series seasonal variations can occur within a period of:

business mathematics and statistics moving averages introduction to time series introduction to time series and forecasting time series and forecasting uses of average in day-to-day life

  1. Four years

  2. Three years

  3. One year

  4. Nine years

Show answer
Correct Option: C
Explanation:

$\Rightarrow$  In time series seasonal variations can occur within a period of : $One\,year$.

$\Rightarrow$  Over a span of one year, seasonal variation takes place due to the rhythmic forces which operate in a regular and periodic manner. These forces have the same or almost similar pattern year after year.
$\Rightarrow$  The seasonal variations may be due to various seasons or weather conditions for example sale of cold drink would go up in summers & go down in winters.

Indicate which of the following an example of seasonal variations is:

business mathematics and statistics moving averages introduction to time series introduction to time series and forecasting time series and forecasting uses of average in day-to-day life

  1. Death rate decreased due to advance in science

  2. The sale of air condition increases during summer

  3. Recovery in business

  4. Sudden causes by wars

Show answer
Correct Option: B
Explanation:

$\Rightarrow$  Example of seasonal variation is : $The\,sale\,of\,air\,condition\,increases\,during\,summer.$

$\Rightarrow$  Over a span of one year, seasonal variation takes place due to the rhythmic forces which operate in a regular and periodic manner. These forces have the same or almost similar pattern year after year.
$\Rightarrow$  The seasonal variations may be due to various seasons or weather conditions.
$\Rightarrow$  These variations may be also due to man-made conventions & due to habits, customs or traditions.