Which indicator changes after the economy has changed?
Options
ALeading
BCoincident
CLagging
DConcurrent
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Business CyclesMTP - Dec 2023Question 93 of 20
All Questions Correct Answer
✅ Option c — Lagging
All Options:
- ALeading
- BCoincident
- CLagging
- DConcurrent
Detailed Solution & Explanation
To understand which indicator changes after the economy has changed, we need to look at the different types of economic indicators.
• Leading indicators are those that change before the economy changes, such as stock market trends or new business formations.
• Coincident indicators change at the same time as the economy, such as GDP or inflation rate.
• Lagging indicators change after the economy has changed, such as unemployment rates or average duration of unemployment.
• Concurrent indicators also change at the same time as the economy, similar to coincident indicators.
The correct answer is the lagging indicator because it reflects the changes in the economy after they have occurred.
This is why lagging indicators are useful for confirming whether an economic trend has actually changed.
In contrast, leading indicators like stock market trends are incorrect because they change before the economy changes, and coincident indicators like GDP are also incorrect because they change at the same time as the economy.
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 SyllabusExam 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.
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