Which of the following statements about the components of a time series are correct?
(A) The secular trend shows the smooth, regular and long-term movement of the series.
(B) Seasonal variations repeat within a period of one year.
(C) A cyclical movement has a period of less than one year.
(D) Irregular variations are caused by unforeseen events such as floods and labour strikes.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → (A), (B) and (D) only
A time series has four components: the secular trend (the long-term direction), seasonal variations (a pattern repeating every year), cyclical variations (booms and depressions, one cycle lasting more than a year) and irregular variations (unpredictable, short-term effects of unforeseen events).
So the trend is long-term, seasonal changes repeat within a year, a cycle lasts more than a year, and irregular changes come from unforeseen events.
Checking the statements
(A) The secular trend shows the smooth, regular and long-term movement of the series. — Correct. This is the meaning of the secular trend.
(B) Seasonal variations repeat within a period of one year. — Correct. They follow the seasons of each year.
(C) A cyclical movement has a period of less than one year. — Incorrect. One cycle lasts more than a year.
(D) Irregular variations are caused by unforeseen events such as floods and labour strikes. — Correct. Such events are sudden and cannot be predicted.