Which of the following statements are correct?
(A) Time series analysis helps to see how a business or economic variable changes over a period of time.
(B) The success of time series forecasting tools in predicting future patterns is guaranteed.
(C) Cross-sectional data are collected for one or more variables at the same point in time.
(D) Time series data are collected at distinct time intervals for a specified period of time.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → (A), (C) and (D) only
A time series records a variable at successive times, so it shows how the variable changes over time and helps to forecast it. Forecasts are based on past patterns, which may not continue, so their success is not guaranteed. Data are of three kinds: time series data (collected at distinct time intervals), cross-sectional data (collected at the same point in time) and pooled data (a combination of both).
So time series analysis studies change over time, its forecasts can fail, cross-sectional data belong to one point in time, and time series data are collected at distinct time intervals.
Checking the statements
(A) Time series analysis helps to see how a business or economic variable changes over a period of time. — Correct. This is the main use of a time series.
(B) The success of time series forecasting tools in predicting future patterns is guaranteed. — Incorrect. Past patterns may change, so success is not guaranteed.
(C) Cross-sectional data are collected for one or more variables at the same point in time. — Correct. This is the meaning of cross-sectional data.
(D) Time series data are collected at distinct time intervals for a specified period of time. — Correct. This is the meaning of time series data.