Economics - Economics Section 2
36. Which of the following factors contribute the most towards cost push inflation?
- Option : C
- Explanation : This is because wages generally represent the biggest cost for most business. Cost-push inflation is also known as wage-push inflation.
- Option : B
- Explanation : S&P 500 index is a leading indicator of economic activity and an increase in it is an indicator of rehiring at the start of a recovery.
38. Which of the following is not thought to be a lagging indicator for the US economy?
- Option : C
- Explanation : The average weekly initial claims for unemployment insurance is a leading indicator.
- Option : A
- Explanation : Because long-term yields express market expectations about the direction of short-term interest rates, and rates ultimately follow the economic cycle up and down, a wider spread, by anticipating short rate increases, also anticipates an economic upswing.
40. Which of the following statements about economic indicators is most likely true?
- A
Inventory sales ratio is considered a coincident indicator because inventories start accumulating even with a slight dip in sales.
- B
Money supply is considered a lagging indicator because monetary policy takes time to be implemented.
- C
The stock index level is considered a leading indicator because stock movements offer a useful early signal on economic cycles.
- Option : C
- Explanation : The stock prices are based on expected future performance. Inventory sales ratio is a lagging indicator because inventories accumulate as sales initially decline and become depleted as sales pick up. Money supply is a leading indicator measuring the tightness or looseness of monetary policy.
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