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Analysing statistical data · Part 3 of 3
6 exam-style questions with model answers, plus 10 quick multi-choice questions — every question on this part of the standard, grouped by the 2 pages of notes they come from.
Write a full answer before you reveal the model one. That comparison is where the learning happens.
Explain what extrapolation means, and state the three requirements a justified forecast has to meet.
A student forecasts that New Zealand's unemployment rate will rise, based only on the fact that unemployment has been rising for six quarters.
Explain in detail why this is not a justified forecast, and what would need to be added.
Your two issues are inflation and the Official Cash Rate. Inflation has fallen from 6.8% to 3.1% over eight quarters, and the OCR has been held at 5.5% for the past four quarters after rising steadily before that.
Make a justified forecast for inflation, using extrapolated data from both issues, and discuss the limitations of your forecast.
(Figures are invented, for method only.)
A price index reads 100.0 in Q1, 106.0 in Q2, 107.0 in Q5 and 108.0 in Q6.
Calculate the annual inflation rate at Q5 and at Q6, and explain why the annual rate fell.
Explain in detail why the annual and quarterly measures of the same series can tell different stories, and set out when each one should be used.
Annual CPI inflation in New Zealand falls from 6.4% to 2.9% over four quarters. A student concludes that the RBNZ's tighter OCR has worked and forecasts that inflation will keep falling.
Discuss this conclusion. Compare and contrast the two explanations available, give a reasoned judgement, and state what data would settle it.