Catherine Hood Consulting

Sample Quiz: Why Seasonal Adjustment?

  1. What is the goal of seasonal adjustment?

    Correct

    The basic goal of seasonal adjustment is to decompose a time series into a several different components, including a seasonal component, for the purpose of removing the seasonal effect.

    Incorrect

    Seasonally adjusted series are generally smoother than the unadjusted original series, but we want to use this smoother series to help us see turning points, not always to smooth the series so much that the turning points are gone.

    Incorrect

    Events like huricanes can be tragic, but that doesn't mean they aren't an important part of our time series. They are not seasonal effects, and they are not eliminated from the seasonally adjusted series.

  2. Seasonal effects may be caused by

    Incorrect

    Natural factors can cause seasonal effects, but there is a better answer.

    Incorrect

    Administrative measures can cause seasonal effects, but there is a better answer.

    Incorrect

    Religious traditions can cause seasonal effects, but there is a better answer.

    Correct

    "All of the above" can cause seasonal effects. Warmer weather in the summer, end of the tax year, and buying Christmas gifts can all be causes of seasonal effects, depending on the particular series.

  3. What is the disadvantage of looking at year-to-year changes in a time series?

    Incorrect

    I hate to bring bad news, but if you are lacking the data from the past year so that you can not compute a year-to-year change, then you also do not have enough data for seasonal adjustment.

    Correct

    This is the main disadvantage. It will take several months or quarters before we can see any turning points at the end of the series.

    Incorrect

    Though this statement is true, large seasonal oscillations have nothing to do with the disadvantages of year-to-year changes.


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