Question: The CPI measures the increase (or decrease) in the prices of goods and services relative to a base year. The CPI for the years 1990-2015

The CPI measures the increase (or decrease) in the prices of goods and services relative to a base year. The CPI for the years 1990-2015 (using 1984 as a base period) is shown in the table below.
a. Graph the time series. Do you detect a long-term trend?
b. Calculate and plot the exponentially smoothed series for the CPI using a smoothing constant of w = .4. Use the exponentially smoothed values to forecast the CPI in 2015.
c. Use Holt's forecasting model with trend to forecast the CPI in 2015. Use smoothing constants w = .4 and v = .5.

Year CPI Year CPI 1990 1991 125.8 129.1 132.8 136.8 147.8 152.4 156.9 160.5 2003 2004 184.0 188.9 1992 1993 1994 1995 1996 1997 2005 2006 195.3 201.6 207.3 215.3 214.5 2007 2008 2009 2010 218.1 1998 1999 2000 2001 2002 163.0 166.6 2011 2012 2013 2014 2015 224.9 229.6 233.0 236.7 237.0 171.5 177.1 179.9

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