Question

The following statements are correct , EXCEPT One criticism of moving average is that they normally give equal weight to all observations. A smoothing forecast method is often used when data series tends to change fast between periods First-order Exponential Smoothing show sthat forecast is based on geometrically declining weights. A large w in First-order Exponential Smoothing model indicates that a heavy weight is being placed on the most recent observations. Econometric methods can be used to predict not only the direction of change in an economic series, but also the magnitude of that change

Answer 1

Option B.

All the above mentioned options are correct except the statement that a smoothing forecast method is often used when data series tend to change fast between time periods. Smoothing is a time series forecasting method for univariate data without a trend or seasonality. If the data is changing fast but following a trend , then smoothing is not used.