NISM Certifications · NISM-Series-XV: Research Analyst · Economic Analysis
In the context of business cycle analysis, which of the following indicators is classified as a lagging indicator?
Outstanding bank credit to industry is a lagging indicator because it changes only after the economy has already turned. Stock indices, new orders for capital goods and building permits generally move ahead of the business cycle, making them leading indicators.
- AStock market index levels
- BNew orders for capital goods
- COutstanding bank credit to industryCorrect
- DBuilding permits issued
Explanation
Lagging indicators change after the economy has already turned. Bank credit outstanding adjusts after output and investment shift. Stock indices, new orders and building permits tend to move ahead of the cycle, so they are leading indicators.
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