Spain’s economy has struggled with very high unemployment rates as a result of the Eurozone banking crisis. The following data show the annual unemployment rate over a nine-year period. These data can also be found in the Excel file Spain unemployment.xlsx.

a. Using a three-period weighted moving average with weights 4, 2, and 1, forecast the unemployment rate for Spain in 2013.

b. Calculate the MAD for the forecast in part a.

c. Using exponential smoothing with a = 0.8, forecast the unemployment rate for Spain in 2013.

d. Calculate the MAD for the forecast in part a.

e. Which forecast do you have most confidence in?AppendixLO1

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Unemployment Unemployment Year Rate (%) Year Rate (%) 2004 10.4 2009 18.0 2005 9.2 2010 20.1 2006 8.1 2011 21.7 2007 8.3 2012 25.0 2008 11.3