Question

Putting forecast errors into perspective is best done using (multiple choice)

a. linear decision rules.
b. hindsight.
c. exponential smoothing.
d. MAPE.
e. MAD.

Answer 1

The best method for putting forecast errors into perspective is MAD (Mean Absolute Deviation), which measures the average magnitude of the errors in a forecast.

Step-by-step explanation:

The best method for putting forecast errors into perspective is MAD (Mean Absolute Deviation). MAD is a measure of the average magnitude of the errors in a forecast. It provides a straightforward and easily interpretable measure of forecast accuracy. By calculating the MAD, the economist can assess how well his model matched what actually happened in the stock market.