Comovement Can Be Discerned by

question 6

Multiple Choice

Comovement can be discerned by

• A) calculating the percentage deviations from trend in real GDP.
• B) whether it is a procyclical or countercyclical variable.
• C) calculating the correlation coefficient between the percentage deviations from trend.
• D) determining if it is a lagging or leading indicator.
• E) looking at the composite index of business leading indicators.

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Definitions:

Diseconomies of Scale

The phenomenon where production costs per unit increase as a firm's production increases.

Diminishing Returns

A principle stating that as more of a variable input is added to a fixed input, beyond some point, the additional output from the additional input will decrease.

Marginal Cost

The financial outlay required to create another unit of a good or service.

Average Total Cost

The total cost of production (fixed plus variable costs) divided by the number of goods produced, essentially the per unit production cost.