Consider the following linear trend models estimated from 10 years of quarterly data with and without seasonal dummy variables d₁, d₂, and d₃. Here, d₁ = 1 for quarter 1, 0 otherwise; other dummy variables are defined similarly.

Model 1: y = 41.00 + 0.33t

Model 2: y = 41.00 + 0.53t 0.37d₁ 0.47d₂ 0.24d₃

Use each model to make a forecast for y for the first and the fourth quarters of the 11th year.

Note: Round your answers to 2 decimal places.

Date Model 1 Model 2

1st Quarter, Year 11 ______ ______

4th Quarter, Year 11 ______ ______

Which is the preferred model for forecasting if, relative to Model 1, Model 2 has higher R² but lower adjusted R²?

___________ Because it has the ____________ ___________