An economic analyst is tracking how different metrics react around business cycle turning points. Arrange the following economic indicators in chronological sequence based on when they typically shift direction during a business cycle transition, starting with the indicator that changes first (leading) and ending with the indicator that changes last (lagging).
- 1Average weekly initial claims for unemployment insurance
- 2Index of Industrial Production
- 3Average duration of unemployment
- 4Ratio of consumer installment credit to personal income
Answer
The correct chronological sequence from earliest turning indicator to latest turning indicator is: Average weekly initial claims for unemployment insurance, followed by Index of Industrial Production, followed by Average duration of unemployment, and finally Ratio of consumer installment credit to personal income.
The correct sequence places the leading indicator first, followed by the coincident indicator, and concludes with the lagging indicators in order of reaction. Average weekly initial claims for unemployment insurance changes direction prior to general economic shifts (leading). The Index of Industrial Production shifts concurrently with real economic output (coincident). The average duration of unemployment turns after economic trend shifts (lagging), and the ratio of consumer installment credit to personal income turns latest as household borrowing aligns with personal income (lagging).
Step-by-Step Solution
Key Concept
Sequence and timing of economic indicators (Leading, Coincident, and Lagging)
Estimated Time:1m 30s