Question

“To understand what causes the business cycle, leading variables alone are of interest. Coincident and lagging variables merely display the consequences of changes in the economy.”

Do you agree with the statement above? Explain.

Answer 1

Yes, because of the following reasons:

Lagging indicators can only be known after the event. They can explain and affirm an example that is happening after some time. The unemployment rate is one of the most solid slacking pointers. In the event that the joblessness rate increased a month ago and the prior month, it demonstrates that the general economy has been doing inadequately and may well keep on doing poorly. The Consumer Price Index (CPI), which estimates changes in the expansion rate, is another firmly watched slacking indicator. There are scarcely any occasions that cause more financial far-reaching influences than cost increments. Both the general number and costs in critical businesses like fuel or clinical expenses are of intrigue.

The coincident indicator is dissected and utilized as they happen. These are key numbers that substantially affect the general economy. Retired pay is an incidental marker of monetary wellbeing. Higher individual salary numbers concur with a more grounded economy. Lower individual pay numbers mean the economy is battling. The (GDP) of an economy is additionally a correspondent pointer