Question 1

The forecasting technique,which predicts technological trends and is carried out by a sequential series of written questions and answers is
A)the Delphi method.
B)the market research method.
C)opinion polling.
D)the jury of executive opinion approach.

Accepted Answer

The Delphi method is a forecasting technique that involves a group of experts who answer a series of written questions about a particular topic. The responses are then analyzed and shared with the group to reach a consensus on the most likely technological trends. This approach allows for anonymous feedback and can result in more accurate predictions compared to individual opinions. The other options listed, such as market research, opinion polling, and jury of executive opinion, have different approaches and are not specifically designed for predicting technological trends.

Question 2

$$\mathrm { Q } = - 6,500 - 100 \mathrm { P } _ { \mathrm { A } } + 50 \mathrm {~PB} + .3 \mathrm { I } + .2 \mathrm {~A} ; \mathrm { R } ^ { 2 } = .12 , ( 2,500 ) ( 50 ) ( 30 ) ( .1 ) ( .08 )$$
$\text {where $Q$ is the quantity demanded of good $A ; P A = \$ 10$, price of good $A ; P _ { B } = \$ 8$, price of good }$
$\text {$B ; I = \$ 12,000$, per capita income; and $A = \$ 20,000$, monthly advertising expenditures.}$
-Which of the following cannot be determined on the basis of the above regression results?
A)the degree of price elasticity of good B
B)whether or not good A is "normal"
C)the degree of competition between A and B
D)All of the above can be determined.

Accepted Answer

The answer of \[\mathrm { Q } = - 6,500...

Question 3

One of the series included among the lagging indicators is
A)the change in sensitive material prices.
B)the index of industrial production.
C)employees on non-agricultural payrolls.
D)average duration of unemployment.

Accepted Answer

Lagging indicators are economic indicators that trail changes in the overall economy. These include measures such as average duration of unemployment, which reflects the overall health of the labor market after other changes have already taken place. Choices A and B are examples of leading or coincident indicators, which provide insight into more immediate changes in the economy. Choice C is also a lagging indicator, but not one of the options presented.

Question 4

The fact that a person with a forceful and persuasive personality but not necessarily the greatest amount of knowledge and judgment can exercise a disproportionate amount of influence is a major drawback of
A)the Delphi method of forecasting.
B)the market research method.
C)opinion polling.
D)the jury of executive opinion approach.

Accepted Answer

The jury of executive opinion approach involves seeking the opinions of a group of high-level executives, who may have forceful personalities but may not necessarily have the greatest knowledge and judgment. This can lead to a disproportionate amount of influence from certain individuals, which is a major drawback of this approach.

Question 5

Which of the following refers to a relatively high correlation among the independent variables of a regression equation?
A)autocorrelation
B)the identification problem
C)statistically insignificant regression coefficients
D)multicollinearity

Accepted Answer

Multicollinearity refers to a situation in which there is a high correlation between two or more independent variables in a regression equation. This can cause problems such as unstable and statistically insignificant regression coefficients, making it difficult to identify the relationship between the independent variables and the dependent variable.

Question 6

A general rule of thumb is that if,after a period of increases,the leading indicator index sustains ________ consecutive declines,a recession (or at least a slowing of the economy)will follow.
A)three
B)four
C)five
D)six

Accepted Answer

Three consecutive declines in the leading indicator index after a period of increases is often considered a signal that a recession or at least a slowing of the economy may follow. This rule of thumb is used by economists and analysts to predict economic downturns.

Question 7

Which of the following is a leading economic indicator? A)average hours,manufacturing B)money supply M₂ C)stock prices,500 common stocks D)All of the above

Accepted Answer

All of the choices listed are considered leading economic indicators. Average hours in manufacturing can indicate future production levels, money supply can affect spending and inflation, and stock prices can reflect investor expectations for future economic growth.

Question 8

The method of forecasting with leading indicators can be criticized for
A)occasionally forecasting a recession when none ensues.
B)forecasting the direction of the economy but not the size of the change in economic activity.
C)frequent revisions of data after original publication.
D)All of the above

Accepted Answer

The method of forecasting with leading indicators can occasionally forecast a recession when none ensues, forecast the direction of the economy but not the size of the change in economic activity, and result in frequent revisions of data after original publication.

Question 9

Which of the following is most likely to indicate a statistically significant regression coefficient? A)|t| > R² B)R² > .90 C)|t| > 2 D)|t| > 4

Accepted Answer

A common threshold for statistical significance is a t-value of 2 or higher, so option C is the only one that meets this criterion. Options A, B, and D do not provide a clear threshold for statistical significance.

Question 10

The F-test is used in forecasting to
A)establish confidence intervals for testing regression coefficients.
B)examine the degree of multicollinearity among independent variables.
C)determine how well a regression equation can account for dependent variable values.
D)determine whether an identification problem exists.

Accepted Answer

The F-test in forecasting is primarily used to determine how well a regression equation can account for the variation in the dependent variable values. It tests the overall significance of the model.

Question 11

$$\mathrm { Q } = - 6,500 - 100 \mathrm { P } _ { \mathrm { A } } + 50 \mathrm {~PB} + .3 \mathrm { I } + .2 \mathrm {~A} ; \mathrm { R } ^ { 2 } = .12 , ( 2,500 ) ( 50 ) ( 30 ) ( .1 ) ( .08 )$$
$\text {where $Q$ is the quantity demanded of good $A ; P A = \$ 10$, price of good $A ; P _ { B } = \$ 8$, price of good }$
$\text {$B ; I = \$ 12,000$, per capita income; and $A = \$ 20,000$, monthly advertising expenditures.}$
-As the manager of good A,which of the following would be of greatest concern (based on the regression results above)?
A)None of the factors below would be of concern.
B)an impending recession
C)pressure on you by your salespersons to lower the price so that they can boost their sales
D)a price reduction by the makers of good B

Accepted Answer

The answer of \[\mathrm { Q } = - 6,500...

Question 12

A manager will have the least confidence in an explanatory variable that A)does not pass the F-test. B)is expressed as a dummy variable. C)does not pass the t-test. D)constitutes only a small part of R².

Accepted Answer

The t-test is used to determine whether a particular explanatory variable has a significant effect on the outcome variable. If the variable fails the t-test, it means that it is not statistically significant and may not be a good predictor of the outcome variable. Therefore, a manager will have the least confidence in an explanatory variable that does not pass the t-test.

Question 13

$$\mathrm { Q } = - 6,500 - 100 \mathrm { P } _ { \mathrm { A } } + 50 \mathrm {~PB} + .3 \mathrm { I } + .2 \mathrm {~A} ; \mathrm { R } ^ { 2 } = .12 , ( 2,500 ) ( 50 ) ( 30 ) ( .1 ) ( .08 )$$
$\text {where $Q$ is the quantity demanded of good $A ; P A = \$ 10$, price of good $A ; P _ { B } = \$ 8$, price of good }$
$\text {$B ; I = \$ 12,000$, per capita income; and $A = \$ 20,000$, monthly advertising expenditures.}$
-As a researcher,which aspect of the results would be of greatest concern?
A)the negative value of the constant
B)the relatively low impact of the competitor's price
C)the fact that not all of the variables are statistically significant
D)the poor fit of the regression line

Accepted Answer

The $R^2$ value of .12 indicates a poor fit of the regression line, meaning that only 12% of the variability in quantity demanded is explained by the model.

Question 14

Average weekly claims for unemployment insurance,money supply and the index of stock prices are all examples of
A)leading indicators.
B)coincident indicators.
C)lagging indicators.
D)None of the above

Accepted Answer

Leading indicators are used to predict future economic activity. Average weekly claims for unemployment insurance can predict economic downturns, money supply can indicate future inflation or economic activity, and the index of stock prices often moves based on future expectations of economic health, making them all examples of leading indicators.

Question 15

A dummy variable is also called
A)an approximate variable.
B)a discrete variable.
C)a zero-sum variable.
D)an improper variable.

Accepted Answer

A dummy variable is a type of categorical variable that takes on values of 0 or 1 to represent a specific category. It is also referred to as a discrete variable because it can only take on a finite number of values. The other options are not accurate descriptions of a dummy variable.

Question 16

The problem of autocorrelation refers to
A)independent variables in a regression equation whose values are closely related to each other.
B)insufficient data to estimate regression coefficient values.
C)regression coefficient values which are not significantly different from zero.
D)regression equation variables which exhibit a similar pattern in their values over a number of time periods.

Accepted Answer

Autocorrelation occurs when there is a similarity in the values of the dependent variable over time. This can result in biased regression coefficients and standard errors, leading to incorrect inference and flawed predictions. Choices A, B, and C do not correctly describe autocorrelation.

Question 17

Which of the following is not one of the leading indicators?
A)index of consumer expectations,U.of Michigan
B)change in consumer price index for services
C)vendor performance,slower deliveries diffusion index
D)manufacturers' new orders,nondefense capital goods

Accepted Answer

Consumer price index for services is not considered a leading indicator as it reflects past price changes rather than predicting future economic activity. The other three options are considered leading indicators as they provide insight into future economic trends.

Question 18

The forecasting technique which involves the use of the least squares statistical method to examine trends,and takes into account seasonal and cyclical fluctuations,is known as
A)compound growth rate projection.
B)the Delphi method.
C)time series projection.
D)exponential smoothing projection.

Accepted Answer

Time series projection uses the least squares statistical method to examine trends and takes into account seasonal and cyclical fluctuations. Compound growth rate projection is a technique for estimating growth by assuming a constant growth rate over a period of time. The Delphi method is a qualitative forecasting method that involves obtaining judgments from a panel of experts. Exponential smoothing projection is a technique for smoothing out fluctuations in time series data.

Question 19

From a management policy perspective,which regression result is the most useful? A)a regression equation that passes the F-test B)a regression equation whose explanatory variables all pass the t-test C)a regression equation that has the highest R² D)a regression equation that has the least number of dummy variables

Accepted Answer

A regression equation whose explanatory variables all pass the t-test is the most useful from a management policy perspective as it indicates which explanatory variables are statistically significant in explaining the dependent variable, allowing for informed decision-making and policy implementation. The F-test only assesses the overall significance of the regression equation, while the R² is not a commonly used measure in regression analysis. The number of dummy variables is dependent on the specific research question and cannot be generalized as the least number of dummy variables may not necessarily be the most useful in all cases.

Question 20

In the estimation of demand,the "identification problem" refers to
A)the problem of selecting the proper level of significance.
B)the problem of deciding whether to use time series or cross-sectional data.
C)the problem of separating out the effects of price on the quantity demanded when supply cannot be held constant.
D)the problem of having insufficient variation in prices.

Accepted Answer

The identification problem refers to the challenge of determining the impact of price on demand when it is difficult or impossible to hold supply constant. This is often the case in real-world markets, where changes in price may have multiple causes and be influenced by factors outside of the researcher's control. As a result, it can be difficult to determine the true relationship between price and demand, which can complicate the process of estimating demand curves and making accurate predictions about consumer behavior.

Quiz 5: Demand Estimation and Forecasting Appendices 5A and 5B

The forecasting technique,which predicts technological trends and is carried out by a sequential series of written questions and answers is

One of the series included among the lagging indicators is

The fact that a person with a forceful and persuasive personality but not necessarily the greatest amount of knowledge and judgment can exercise a disproportionate amount of influence is a major drawback of

Which of the following refers to a relatively high correlation among the independent variables of a regression equation?

A general rule of thumb is that if,after a period of increases,the leading indicator index sustains ________ consecutive declines,a recession (or at least a slowing of the economy) will follow.

Which of the following is a leading economic indicator?

The method of forecasting with leading indicators can be criticized for

Which of the following is most likely to indicate a statistically significant regression coefficient?

The F-test is used in forecasting to

A manager will have the least confidence in an explanatory variable that

Average weekly claims for unemployment insurance,money supply and the index of stock prices are all examples of

A dummy variable is also called

The problem of autocorrelation refers to

Which of the following is not one of the leading indicators?

The forecasting technique which involves the use of the least squares statistical method to examine trends,and takes into account seasonal and cyclical fluctuations,is known as

From a management policy perspective,which regression result is the most useful?

In the estimation of demand,the "identification problem" refers to