ExpertEasy1 markMultiple Choice
CPA · Question 11 · Area 1: Business Analysis
Which of the following economic indicators is considered a 'Lagging Indicator' that confirms a trend rather than predicting it?
Which of the following economic indicators is considered a 'Lagging Indicator' that confirms a trend rather than predicting it?
Answer options:
A.
New housing starts
B.
Unemployment rate
C.
Stock market indices
D.
Consumer confidence index
How to approach this question
Think about the timing: Do businesses hire/fire before a recession starts (Leading) or after they realize sales are down (Lagging)?
Full Answer
B.Unemployment rate✓ Correct
Unemployment is a lagging indicator because employment decisions (hiring/layoffs) typically occur after economic trends (growth/decline) have already established themselves.
Common mistakes
Confusing stock market (forward-looking) with labor market (reactive).
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