Question: The monthly unemployment rates in Zamunda for 1999-2004 are given in the Unemployment.xls data file.

(a) Plot the time series.

(b) Describe the time series in terms of trend, seasonal, cyclic and irregular components

(c) Compute 5-period moving averages.

(d) Plot the moving averages.

(e) Does the plot in part (d) provide evidence in support of your description in part (b)?

(f) You computed 5-period moving averages in part (c).

(i) What is the implication of using 2-period moving averages instead?

(ii) What is the implication of using 7-period moving averages instead?

Note: No need to re-compute moving averages. Discuss what happens (in relation to 5-period moving averages) when 2-period and 7-period moving averages are used.

(g) Estimate a linear trend line and compute seasonal indexes.

(h) Hence (using information in part (g), forecast unemployment rate for each month of 2005.