CA Foundation · Business Economics · Business Cycles
Which of the following is an example of a lagging economic indicator in business cycle analysis?
The unemployment rate and average duration of unemployment are lagging indicators because they rise after a recession begins and fall well after an expansion has started, confirming the business cycle phase that has already occurred rather than predicting future changes.
- AStock market index movements and consumer confidence surveys
- BUnemployment rate and average duration of unemploymentCorrect
- CNew building permits issued and orders for durable goods
- DIndex of leading economic indicators and yield curve inversions
Explanation
Lagging indicators confirm the business cycle after it has already changed direction; unemployment typically rises after recession begins and falls well after expansion starts. Options 2 and 3 are leading indicators (they precede cycle changes). Option 4 contains leading indicators, not lagging ones. Option 1 correctly identifies unemployment metrics as lagging indicators that confirm the phase after the fact.
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