The plots to the left and right show exponentially weighted

The plots to the left and right show exponentially weighted moving averages (EWMA) of the percentage change of a country\'s gross national product (GNP). The time series is quarterly for a five-year period_ To the left the weight w in the EWMA is 0.3, and w = 0.8 to the right. 20 The EWMA in both cases is shown as a line and the surrounding data as dots. Complete parts a through c below The EWMA with w = 0.8 is better because it captures less random variation. (b) In the most recent quarter (the last data point in this series), the GYP was estimated to be $11.801 billion. What would you forecast, having seen these plots, for GNP for the next quarter? The GNP for the next quarter should be about $ (Round to three decimal places as needed.)

Solution

As w=0.8 is more reliable we consider the right graph for prediction.

The graph shows a tendency to increase for the next quarter.

Hence estimate for the next quarter = 2.48 (approxly)