Question 10 (1 point)

You have semi-annual data from 1991.1 through 1993.2 (so 6 observations) with Quantity values of 1.8, 2.4, 2.2, 2.8, 2.5, and 3.3 for each period in sequence. Your simple trend regression estimate using Excel is Q = 1.66 + 0.24*Trend. The standard error for the 1.66 estimate is 0.26, the standard error for the 0.24 estimate is 0.07, and the adjusted R squared is 0.71. Your trend regression with seasonal dummy estimate using Excel is Q = 2.03 + 0.20*Trend - 0.47*DUM1 where DUM1 is a dummy variable = 1 if observation is in 1st half of a year and 0 if in 2nd half of a year. The standard error for the 2.03 estimate is 0.07, for the 0.20 estimate it is .02, for the -0.47 estimate it is .06, and the adjusted R squared is 0.98. If you use the simple trend estimate, your forecasted value for 1995.1 (1st half of 1995) is ____

Question 10 options:

a)

3.8

b)

2.9

c)

3.2

d)

3.5