Economic Indicators

Question 1

Examples of leading indicators

Answer 1

Building approvals, share prices, business confidence

Question 2

What is a leading indicator

Answer 2

Leading indicators change before a direction change in the business cycle becomes evident.

A leading economic indicator will increase before the level of economic activity actually increases.

They therefore predict trends in economic activity

Question 3

What are coincident indicators

Answer 3

These indicators typically move in line with the overall economic activity, providing real-time insights into economic performance.

In other words they change simultaneously with economic activity.

Question 4

Coincident Indicator Example

Answer 4

GDP, retail sales, job advertisements, household income.

Question 5

Lagging Indicator

Answer 5

These indicators typically change after the economy has already begun to follow a particular trend, providing confirmation of the pattern and helping to validate the current state of the economy.

Question 6

Lagging Indicators Example

Answer 6

Unemployment rate, wages, inflation rate

Question 7

Countercyclical definition

Answer 7

A countercyclical indicator is one that decreases when the level of economic activity or business cycle increases or vice versa. Eg unemployment

Question 8

Procyclical definition

Answer 8

A procyclical indicator is one that increases when the level of economic activity or business cycle increases.