Chapter 12 Business cycles and economic growth Part 2

Flashcards on business cycle indicators, leading, coincident, and lagging indicators.

What are the three main categories of business cycle indicators?

Leading indicators, coincident indicators, and lagging indicators.

What is the main characteristic of leading indicators?

They change before the economy shifts from one business cycle phase to another.

Give examples of leading indicators.

Changes in business/consumer credit, housing finance, new orders for plant, new consumer goods orders, new businesses formed, and new building permits.

Give examples of private sector leading indicators.

Job Ads, Westpac/Melb Institute Consumer Sentiment Index, NAB Survey of Business Conditions, and Westpac/Melb Institute Leading Index.

What is the main characteristic of coincident indicators?

They change at about the same time as the economy shifts from one cycle phase to another.

Give examples of coincident indicators.

Unemployment rate, household income, industrial production, retail sales, and personal incomes.

What is the main characteristic of lagging indicators?

They change after a phase change in the economy has occurred.

Give examples of lagging indicators.

Duration of unemployment, labor cost per unit of output, inventories to sales ratio, outstanding commercial loans, commercial credit to personal income ratio, and government budget balance.

Name some sources that can be used as indicators of business investment.

National accounts, Capex survey, Capital imports, Motor vehicle sales to business, Non-residential building, Work done, Approvals, Commencements, Concrete production, Commercial property vacancy rates, Office property vacancy rates.

Give examples of frequencies for indicators of business investment

Quarterly, Monthly, Semi-annually.