As the value of $\alpha$ gets closer to 0 ,
A) the pace of adjustment to forecast errors slows
B) the pace of adjustment to forecast errors speeds up
C) the smoothing increases
D) the smoothing decreases
E) A and D

Question

Quizplus · Accepted Answer

When $\alpha$ approaches 0, the weight given to the most recent observation decreases, leading to a slower adjustment to forecast errors (A) and an increase in smoothing (D), as more emphasis is placed on past data rather than recent observations.

As the Value Of α\alphaα Gets Closer to 0 , A) the Pace of Adjustment

As the Value Of $\alpha$ Gets Closer to 0 ,
A) the Pace of Adjustment