Question

U.S. business bankruptcies.The American Bankruptcy Institute and the National Bankruptcy Research Center monitor the number of business bankruptcy filings each quarter. The table below lists the number of business bankruptcy filings for each quarter of a recent 2-year period. FILING

a.Explain why the data in the table represent time series data.

b.Construct a time series plot for the quarterly number of bankruptcy filings.

c.Do you detect a trend in the time series plot? Explain.

Year	Quarter	Number of Bankruptcies
2011	1 2 3 4	12,376 12,304 11,705 11,149
2012	1 2 3 4	10,998 10,374 9,248 9,231

Short answer

1. Data collected over a period of time is called time-series data.
2. 
   

C. Downward sloping trend

Step-by-step solution

Explaining why the data is a time series

Data that is spread over a period of time is called time-series data. For example, data collected every month on a person’s weight from birth to 18 years is time-series data.

The data above is a time series because the data on the number of bankruptcy filings is collected quarterly for 2 years. So the period of time over which the data is spread is 2 years.

Plotting the time series data

Detecting a trend

The most visible observation is that over a period of 2 years, the number of bankruptcy filings has declined. Therefore, there is a downward trend.