Business CyclesPYQ - Nov 2018Question 82 of 20
All Questions

A leading indicator is:

Options

AA variable that tends to move in advance of aggregate economic activity
BA variable that tends to move at the same time as aggregate economic activity
CA variable that tends to move after aggregate economic activity
DNone of the above
For any discrepancies in this question, email contact@cadada.in

Correct Answer

✅ Option a — A variable that tends to move in advance of aggregate economic activity

All Options:

  • AA variable that tends to move in advance of aggregate economic activity
  • BA variable that tends to move at the same time as aggregate economic activity
  • CA variable that tends to move after aggregate economic activity
  • DNone of the above

Detailed Solution & Explanation

To determine the correct answer, let's break down the concept of leading indicators in the context of business economics. • A leading indicator is a variable that changes before the overall economy changes, serving as a signal for future economic trends. • This concept is based on the idea that certain economic factors can predict or precede fluctuations in aggregate economic activity, such as GDP or employment rates. • Leading indicators are important because they help economists and policymakers forecast economic shifts, allowing for proactive measures to mitigate potential downturns or capitalize on upswings. The correct answer is right because it accurately defines a leading indicator as a variable that moves in advance of aggregate economic activity, aligning with economic theories on business cycles and forecasting. In contrast, options that suggest a variable moves at the same time as or after aggregate economic activity are incorrect, as these describe coincident and lagging indicators, respectively.

About This Chapter: Business Cycles

Paper

Paper 4: Business Economics

Weightage

5%

Key Topics

Phases, Features, Causes

Business Cycles describe the recurring fluctuations in economic activity — Expansion, Peak, Recession, and Trough. This chapter covers the phases, features, and causes of business cycles, along with theories explaining why economies go through regular boom-bust patterns.

View Official ICAI Syllabus

Exam Strategy Tip

This is a lower-weightage chapter but easy to score. Focus on memorizing the four phases and their characteristics. Questions are usually straightforward.

Related Comparison Tables

Microeconomics vs Macroeconomics: The Complete CA Foundation Guide

More Questions from Business Cycles

The lowest point in the business cycle is referred to as the:

Which of the following is not an example of coincident indicator?

Features of Business Cycles include:

Which one is an external cause of business cycles?

During expansion phase, employment:

Economic recession shares all of these characteristics except:

Ready to Master Business Cycles?

Practice all 20 questions with instant feedback, earn XP, track your streaks, and ace your CA Foundation exam.

Start Practicing — It's Free