In reference to the Time Series Analysis, which of the following statements are correct?
A. Variations which generally occur due to the general tendency of the data to increase or decrease, are known as secular variations.
B. Variations which occur due to change in climate, weather conditions, festivals etc. are known as seasonal variations.
C. Variations which occur due to some unpredictable forces are known as cyclic variations.
D. Variations which occur due to booms and depressions are known as irregular variations.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → A and B only
A time series has four components: the secular trend, seasonal variations, cyclic variations and irregular variations.
So the trend is the long-term rise or fall, seasonal variations come from seasons, weather and festivals, cyclic variations come from booms and depressions (the business cycle), and irregular variations come from unpredictable events.
Checking the statements
(A) Variations which generally occur due to the general tendency of the data to increase or decrease, are known as secular variations. — Correct. The long-term tendency to rise or fall is the secular trend.
(B) Variations which occur due to change in climate, weather conditions, festivals etc. are known as seasonal variations. — Correct. Changes that repeat within a year because of seasons, weather and festivals are seasonal.
(C) Variations which occur due to some unpredictable forces are known as cyclic variations. — Incorrect. Unpredictable forces such as floods, strikes or wars give irregular variations.
(D) Variations which occur due to booms and depressions are known as irregular variations. — Incorrect. Booms and depressions (the business cycle) give cyclic variations.