Question

explain how the use of leading economic indicators to oredict recessions can lead to less accurate policy decisions?

Answer 1

ANS: A leading economic indicator is a piece of economic data that corresponds that with a future movement or to be a change in some of the phenomenon or intrest. The Economic leading indicators that help to predict and forecast future events and trends in business , markets , and the economy.

As mainly the leading economic indicators are the GDP, CPI and the Unemployment . As a leading indicator is a piece of economic data that corresponds with a future movement or change in some phenomenon of interest. Economic leading indicators can help to predict and forecast future events and trends in business , markets and the economy.

As leading indicators are not to be always accurate. However , looking into several leading indicators in conjunction with other types of data can help provide information about the future health of an economy. Leading indicators often face trade offs as between the accuracy , precision, and lead time in predicting future events.

While an ideal leading indicator would predict the changes in the economic trends or the business performance accurently , as within a narrow range of estimates and over long time horizon, in practice , all leading indicators bshows variable performance along these dimensions.