If the model y_t = T_t × S_t × I_t is applied, which of the following indicates no seasonality? A) The sum of the adjusted seasonal indices equals the number of seasons. B) The average of the adjusted seasonal indices equals 1. C) Every adjusted seasonal index is practically 1. D) The product of the adjusted seasonal indices equals 1.

Question

Quizplus · Accepted Answer

If every adjusted seasonal index is practically 1, then there is no seasonality in the data. Option A is not correct because the sum of adjusted seasonal indices can exceed or fall below the number of seasons, even in data with no seasonality. Option B is also not accurate because the average of the adjusted seasonal indices can be 1 in data with seasonality. Option D is wrong as the product of the adjusted seasonal indices would be 1 for any data set, including the data with seasonality.

If the Model Yt = Tt × St × It

If the Model Y_t = T_t × S_t × I_t