Future Business Leaders of America (FBLA) Agribusiness Practice Test

Which situation would require an adjustment for trend in time series data?

1. Constant pricing of goods

2. Population growth affecting demand

3. Stable economic conditions

4. Declining market interests

The correct answer is: Population growth affecting demand

An adjustment for trend in time series data is necessary when there are underlying factors that consistently influence the data being analyzed, particularly those that exhibit a direction over time. In this context, population growth affecting demand exemplifies a situation that would require such an adjustment. As the population increases, the demand for various goods and services typically rises, leading to a sustained upward trend in the consumption data. Failure to account for this trend could result in misleading analyses or forecasts, as the growth in demand linked to population increases may skew results if treated as random fluctuations instead of a consistent, systematic change. Other options represent scenarios where trends are either non-existent or stable. For example, constant pricing of goods indicates that there is no significant change in this particular variable over time, and thus, no adjustment for trend is needed. Similarly, stable economic conditions suggest that the market is not experiencing significant growth or decline, which also minimizes the need for trend adjustments. Lastly, declining market interests might indicate a downward trend but is more related to specific circumstances rather than an ongoing trend requiring an adjustment for time series analysis. Therefore, population growth is the only option that highlights the need for consideration of a persistent trend over time.