
Explain the difference between (a) stocks and flows; (b) cross-sectional and time-series data; (c) additive and multiplicative models.
(a)

Explain the difference between stocks and flows.
Explanation of Solution
Stocks:
Stocks represents the data, it will be recorded at the particular point of time.
For example, a retail company checks the inventory at every end of month.
Flows:
Flows represents the data, it will be recorded during a period or interval of time.
For example, a retail company checks the whole income for a month and it will consider the whole month income.
(b)

Explain the difference between the cross-sectional and time-series data.
Explanation of Solution
Cross-sectional data:
Cross-sectional data represents the data which is observed from the various studies at a same point of time.
Time-series data:
Time-series data represents the data which is observed over the periods of time.
(c)

Explain the difference between the additive and multiplicative models.
Explanation of Solution
Additive model:
The additive model in time series decomposes the data into four parts, such as components trend ((T), cycle (C), seasonal (S) and irregular (I)) in the form of
Multiplicative model:
The multiplicative model in time series decomposes the data into four components, such as trend ((T), cycle (C), seasonal (S) and irregular (I)) in the form of
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Chapter 14 Solutions
APPLIED STAT.IN BUS.+ECONOMICS
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