Chp#16

Analysis of Time Series

I. What is time series?
( 2018, 2017, 2014 )
Ans. A set of observations recorded at equal interval of time is
called time series. For example:
i. Weekly prices of wheat
ii. Hourly blood pressure recorded of a patient

II. Give two demerits of Free Hand Curve method.

( 2018 )
Ans. Demerits are as follows:
i. It is rough method
ii. Good fitting requires too much practice
iii. Different persons may draw different trends

III. Write two examples of secular trend.

( 2018 )
Ans. Examples of secular trend are:
i. Per capita income
ii. Increase in population
iii. Increase in need of wheat
iv. Increase in literacy rate of country

IV. What are the main components of time series?

( 2017, 2016 )
Ans. There are four main components of time series:
i. Secular trend (T)
ii. Seasonal variations (S)
 iii. Cyclical fluctuations (C)
iv. Irregular movements (I)

V. What do you mean by seasonal variations?

( 2017, 2015, 2014 )
Ans. The movements or variations, which are short term and are
linked with the seasons are called seasonal variations. For
example: (i) Increase in sale of tea in winter
(ii) Increase in sale of ice cream in summer

VI. Give two examples of random variations.

( 2017 )
Ans. Examples of random variations are:
i. Rise in prices of steel due to strike in factory
ii. Accident due to failure of break
iii. Damage of crops by heavy rains
iv. Fire in factory due to rise or fall in voltage of electricity

VII. Write additive model of time series.

( 2017, 2015 )
Ans. In additive model it is assumed that each observed value Y
of a time series is the sum of effects of four components
i.e T, S, C and I. Symbolically Y = T + S + C + I.

VIII. Define irregular movement in time series.

( 2016 )
Ans. The movements which occur due to sudden causes are
called irregular movements. These movements are
unpredictable. For example: (i) Accident due to failure of
break (ii) Damage of crops by heavy rains
IX. Write down the method of estimation of secular trend.
( 2016, 2014 )
Ans. Methods are as follows:
i. Method of free hand curve
ii. Method of semi-average
iii. Method of moving average
iv. Method of least square

X. Explain method of least square in time series.

( 2016, 2015, 2014 )
Ans. The method, which states that among all the curves which
can possibly be drawn to the data, the best fitting curve is
that for which Σ(y-ŷ)² is least is called principal of least
square.

XI. Define cyclical movements.

( 2015 )
Ans. The long-term movements, which are in the form of
oscillation, are called cyclical fluctuations. These changes
are priodic in nature and repeat themselves like business
cycle, which has four phases (i) Prosperity (ii) Contractions
(iii) Depression (iv) Recovery

XII. Define forecasting in time series.

( 2015 )
Ans. Time series forecasting is the process of analyzing time
series data using statistics and modeling to make
predictions and inform strategic decision-making.
For example:
i. Forecasting the closing price of a stock each day.
ii. Forecasting product sales in units sold each day.