answer all parts 3. Leading economic indicators Aa Aa Economists forecast future
ID: 1142063 • Letter: A
Question
answer all parts
3. Leading economic indicators Aa Aa Economists forecast future economic conditions by studying variables that tend to fluctuate in advance of the overall economy. The most significant of these variables are known as leading indicators, and they comprise the index of leading economic indicators. Which of the following variables are measured as part of this index? Check al that apply. New building permits issued Consumer expectations The interest rate spread The ratio of exports to imports New orders for nondefense capital goods True or False: Short-run economic forecasts give the government useful information regarding expected ta:x revenues, but are not relevant to businesses because they cannot adjust output in the short run. O True O False Suppose the most recent data show that the average initial weekly claims for unemployment insurance have decreased lately. This change suggests period in the coming monthsExplanation / Answer
3. a. Economists forecast future economic conditions by studying variables that tend to fluctuate in advance of the overall economy. The most significant of these variables are known as leading indicators, and they comprise the Index of leading economic indicators.
The variables which are considered while forming the index are :
New building permits issued.
Consumer expectations.
The interest rate spread.
New orders for nondefense capital goods.
b.
Short-run economic forecasts give the government useful information regarding expected tax revenues but are not relevant to business because they cannot adjust output in the short run.
This statement is TRUE.
Short-run forecasts help to determine profit levels but since during this short duration production process cannot be adjusted ( due to factors of production, technology being fixed in the short-run) in regard to urgent needs of the business output fails to adjust itself.
c.
Suppose the most recent data show that the average initial weekly claims for unemployment insurance have decreased lately. This change suggests expansionary period in the coming months.
During an expansionary period, there is increased production in the economy which leads to a greater level of employment. So greater the people employed the less they are likely to claim the benefits of unemployment insurance.
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