Unemployment Is a Lagging Indicator Because

question 75

Multiple Choice

Unemployment is a lagging indicator because:

• A) employers wait to see how bad a recession looks before making the difficult decision to lay off workers.
• B) employers wait to see how solid a recovery looks before committing to take on new employees.
• C) firms may first try to decrease or increase the hours of existing employees before changing levels of employment.
• D) All of these are reasons that make unemployment a lagging indicator.

---

Definitions:

Asset Beta

A measure of the risk of a firm's assets without the impact of debt, used to estimate the cost of equity in the capital asset pricing model (CAPM).

Standard Deviation

A measure of the amount of variation or dispersion of a set of values.

Systematic Risk

The risk inherent to the entire market or market segment, which cannot be mitigated through diversification. Also known as market risk or undiversifiable risk.

Capital Asset Pricing Model

A financial model that describes the relationship between systematic risk and expected return for assets, particularly stocks.