Economics Q165
0. 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.
