Question

Which of the following is not a part of the index of lagging economic indicators?

Multiple Choice

• Outstanding commercial loans

• Index of unit labor costs

• None of the options are correct.

• Average prime rate of interest

• Ratio of consumer installment credit to personal income

Which of the following advice is not particularly useful in forecasting the cyclical component of a time series?

Multiple Choice

• All of the options are correct.

• Review the past behavior of the cyclical factor series.

• Avoid subjective forecasts of cycle factors.

• Use time-series smoothing when you expect a trend to continue into the forecast horizon.

• Review the results of several forecasting methods.

A seasonal index number of .80 for quarter one in a time series decomposition model of an automobile parts manufacturer suggests

rev: 11_07_2018_QC_CS-146812

Multiple Choice

• quarter one sales are 1.80% below the norm.

• quarter one sales are 80% below the norm.

• quarter one sales are 20% below the norm.

• quarter one sales are 80% above the norm.

If business cycles were pure cycles, they

Multiple Choice

• All of the options are correct.

• would be easy to forecast.

• would have constant amplitude.

• would have predictable trend reversals.

• would have constant periodicity.

A researcher mistakenly uses deseasonalized data in calculating the seasonal factors. If she found apparent seasonal behavior, this is best attributed to

Multiple Choice

• seasonality.

• the business cycle.

• None of the options are correct.

• trend.

• random noise.

The following specific seasonal factors were estimated for the month of October:

65.4

76.8

66.9

72.6

70.0

If the adjustment is 0.98 and the modified mean is used, and if the expected trend for October is $800, what is the seasonally adjusted forecast?

Multiple Choice

• $561.00

• $551.20

• $570.00

• $1,168.8

• None of the options are correct.

Answer 1

Which of the following is not a part of the index of lagging economic indicators?

Correct answer is None of the above as all the other options are part of the indx of lagging indicators.

• Outstanding commercial loans - As economic distress starts rising in the economy, the demand for short-term loans rises. Rise in loans may signal booming demand but its actually due to economic stress. Hence, once the deflation sets in, the demand again falls. Therefore, it is a lagging indicator.   

• Index of unit labor costs - Production level generally falls after an economic downturn starts. So, rise in unit labour cost (i.e. labor cost per unit of output) will indicate that the production has fallen.

• Average prime rate of interest - This rate charged by the bank lags the general economic growth rate of a country. Since interest rates are linked to central bank policy rates, any indication of an economic downturn is followed by reduction in policy rate by the central bank. Hence, average prime rate is lowered by the banks. Thus it is a lagging indicator.

• Ratio of consumer installment credit to personal income - It is a measure of indebtedness relative to the income. During rising economic growth, consumers become more confident about their earning potential in future and hence increase their consumption. For increased consumption, more credit is taken. Thus, this indicator lags the real economic growth.