This is because wages generally represent the biggest cost for most
business. Cost-push inflation is also known as wage-push inflation.
Economics MCQ - Economics Section 2
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.
The average weekly initial claims for unemployment insurance is a
leading indicator.
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.
- 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.
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.
