Question

Sometimes distinct patterns around a trend line can be caused by A. statistical anomalies. B. dummy variables. C. seasonal variation. D. poor underlying data.

Answer 1

Answer:

C. Seasonal variation

Step-by-step explanation:

Distinct pattern around a trend line can be caused by seasonal variation.

Seasonal variation refers to a component of a time series which can be defined as the repetitive and predictable movement around the trend line in a year or less. It is caused by temperature, rainfall, public holiday and cycles of season

Seasonal variation can be detected by measuring the quantity of interest for small time intervals, such as days, weeks, months or quarters.

Firms affected by seasonal variation are usually interested in knowing their performance relative to the normal seasonal variation. They need to identify and measure this seasonality so as to help with planning.