The Index of Leading Indicators Has

question 135

Multiple Choice

The index of leading indicators has

• A)turned down prior to six of the eight recessions since 1959.
• B)turned up prior to each of the periods of inflation since 1959.
• C)turned down prior to each of the eight recessions since 1959,but it has also falsely forecast several others.
• D)turned down only eight times since 1959,and each downturn has been followed by a recession.

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Definitions:

Externality

A consequence of an economic activity experienced by unrelated third parties; it can be either positive or negative.

Precision-estimates

The accuracy of an estimate in terms of how closely it predicts the actual value, often relevant in statistical analyses and forecasting.

Opportunity Cost

The loss of potential gain from other alternatives when one alternative is chosen.

Investment Project

A project or activity that involves spending capital with the expectation of future financial returns.