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The U.S. monthly inflation rate for 2021 and 2022 (until June) is shown below: Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov
- The U.S. monthly inflation rate for 2021 and 2022 (until June) is shown below:
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| Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec |
| 2021 | 1.4 | 1.7 | 2.6 | 4.2 | 5 | 5.4 | 5.4 | 5.3 | 5.4 | 6.2 | 6.8 | 7 |
| 2022 | 7.5 | 7.9 | 8.5 | 8.3 | 8.6 | 9.1 |
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- Using 3 month moving average method, forecast the inflation rates for 2022 January to June. (Use 2021 inflation rate values).
- Assume that the inflation forecast for January 2021 was 1.4. Using Exponential smoothing method with =0.3, forecast the inflation rates for 2022 January to June.
- Assume that the inflation forecast for January 2021 was 1.4. Using Exponential smoothing
method with =0.5, forecast the inflation rates for 2022 January to June.
- Calculate the forecast error for each of the forecasting methods in (a), (b), and (c). What is the MAD for each of the forecasts generated? Which method is better?
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