(2) There are three primary techniques for forecasting: experience, probability, and correlation. Please explain the strengths and weaknesses of each.Would it make sense to use more than one?Why/why not?

(3) One key to creating realistic forecasts is taking into account important environmental variables.Consider the diagram below. You might have to reach back to your macroeconomic days for this.What does this diagram depict? How might your forecasts change if you were coming out of the trough rather than coming off the peak of the cycle?How would you know?

(4) Given this analysis, what is the danger of using only linear extrapolation (assuming the future is just a linear extension of the past using the same slope) when producing forecasts?What steps could you take to make sure your forecasts are (more) realistic no matter where you are in the business cycle?