TABLE 16-5 A contractor developed a multiplicative time-series model to forecast the number of contracts in future quarters, using quarterly data on number of contracts during the 3-year period from 2006 to 2008. The following is the resulting regression equation: -Referring to Table 16-5, the best interpretation of the constant 3.37 in the regression equation is: A) the fitted value for the first quarter of 2006, prior to seasonal adjustment, is log₁₀ 3.37. B) the fitted value for the first quarter of 2006, after to seasonal adjustment, is log₁₀ 3.37. C) the fitted value for the first quarter of 2006, prior to seasonal adjustment, is 10^3.37. D) the fitted value for the first quarter of 2006, after to seasonal adjustment, is 10^3.37.

Question

Quizplus · Accepted Answer

The constant in a regression equation represents the fitted value when all independent variables are equal to zero. In this case, the independent variables are the seasonal dummy variables, which are all equal to zero for the first quarter of 2006. Therefore, the constant of 3.37 represents the fitted value for the first quarter of 2006, prior to seasonal adjustment.

TABLE 16-5 a Contractor Developed a Multiplicative Time-Series Model to Forecast the Forecast