Asked by Rachel Oftedahl on May 16, 2024
Verified
Which of the following statements about leading economic indicators is true?
A) Most people refer to them before making any important spending decision.
B) They are the only economic indicators available to economists.
C) They indicate when an economy is in a recession or an expansion.
D) They foreshadow turning points in the business cycle.
E) They can predict precisely when turning points in an economy will occur.
Leading Economic Indicators
Variables that predict, or lead to, a recession or recovery; examples include consumer confidence, stock market prices, business investment, and big-ticket purchases, such as automobiles and homes.
Business Cycle
The natural fluctuation of the economy between periods of expansion (growth) and contraction (recession).
- Comprehend the function of economic indicators, such as leading, coincident, and lagging indicators, in predicting economic activities.
Verified Answer
KS
Kendall SmithMay 22, 2024
Final Answer :
D
Explanation :
Leading economic indicators are used to forecast changes in the economy and are generally used by policymakers, businesses, and investors. They provide advance warning of changing business conditions and foreshadow turning points in the business cycle, such as the start of a recession or an expansion. However, they do not predict precisely when these turning points will occur.
Learning Objectives
- Comprehend the function of economic indicators, such as leading, coincident, and lagging indicators, in predicting economic activities.