Seasonal indexes were computed for four quarters over a 10-year period. The seas

Question

Seasonal indexes were computed for four quarters over a 10-year period. The seasonal index for the third quarter is .92. What does this value indicate?

a. It is expected that, on average, the values for the third quarter will be 8% below the annual average.

b. It is expected that, on average, the values for the third quarter will be 92% above the annual average.

c. It is expected that, on average, the values for the third quarter will be 8. above the annual average.

d. It is expected that, on average, the values for the third quarter will be 92% below the annual average.

Explanation / Answer

The sum of the seasonal indices equals the number of seasons. Thus, if the seasons are months, the seasonal indices add to 12. If the seasons are quarters, then the seasonal indices would add to 4, and so on.

Third Quarter has seasonal index of 0.92 which means, Third Quarter unemployment is 8% below average. So, it is expected that, on average, the values for the third quarter will be 8% below the annual average.

Hence, Option (A) is correct answer.

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