NISM Certifications · NISM-Series-XV: Research Analyst · Economic Analysis
In macroeconomic analysis, which of the following is classified as a lagging economic indicator?
Average duration of unemployment is a lagging indicator because it changes only after the economy has already turned, confirming the trend. Stock indices, building permits and new orders for consumer goods are leading indicators, as they usually move ahead of the business cycle.
- AStock market index levels
- BBuilding permits issued for new housing
- CAverage duration of unemploymentCorrect
- DNew orders for consumer goods
Explanation
Lagging indicators change after the economy has already begun a new trend and confirm it. Average duration of unemployment is a standard lagging indicator. Stock indices, building permits and new orders are leading indicators because they typically turn before the broader economy.
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