Aggregate forecasts are usually more accurate than disaggregate forecasts because
A)aggregate forecasts tend to have a larger standard deviation of error relative to the mean.
B)aggregate forecasts tend to have a smaller standard deviation of error relative to the mean.
C)disaggregate forecasts tend to have a smaller standard deviation of error relative to the mean.
D)disaggregate forecasts tend to have less standard deviation of error relative to the mean.

Question

Quizplus · Accepted Answer

Aggregate forecasts tend to have a smaller standard deviation of error relative to the mean, which makes them more accurate than disaggregate forecasts. This is because aggregate forecasts combine data across multiple observations, which helps to smooth out any individual forecast errors and reduce overall forecast variance. In contrast, disaggregate forecasts may be more prone to variability and outliers due to their reliance on individual data points.

Aggregate Forecasts Are Usually More Accurate Than Disaggregate Forecasts Because