CFA Level I · CFA Level I Exam · Understanding Business Cycles
Which of the following is most likely a coincident indicator of the business cycle?
Industrial production is most likely a coincident indicator because it rises and falls together with overall economic activity. Initial unemployment claims lead the cycle, while consumer credit outstanding lags it, so neither of those fits the coincident category.
- AIndustrial productionCorrect
- BConsumer credit outstanding
- CInitial claims for unemployment insurance
Explanation
Industrial production moves with current activity, so it is a coincident indicator. Initial unemployment claims are a leading indicator, and consumer credit outstanding is a lagging indicator.
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