FILE Tourism was hit hard by the international financial crisis that began in the fall of 2008. According to the Bureau of Economic Analysis (December 20, 2010), tourism spending has picked up, but it still remains below its peak, which occurred in 2007. The accompanying table shows a portion of seasonally adjusted data on real tourism spending (in millions of $); the full data set is on the text website, labeled Tourism Spending.

Year Quarter 1 Quarter 2 Quarter 3 Quarter 4 2004 664,924 672,678 675,262 679,410 2005 683,989 690,226 695,753 700,037

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2010 676,929 682,681 695,917 NA SOURCE: U.S. Bureau of Economic Analysis.

a. Construct seasonal indices for the data.

b. Plot the seasonally adjusted series. Estimate the cubic trend model on the seasonally adjusted series.

c. Use the seasonal and trend components to forecast tourism spending for the fourth quarter of 2010 and the first three quarters of 2011.