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An economic variable that changes before real output changes, used to anticipate the direction of the economy, is a:
ALagging indicator
BCoincident indicator
CLeading indicator
DConcurrent indicator
Answer & Solution
Correct answer: C. Leading indicator
1. The chapter defines a leading indicator as a factor that changes before the economy follows a trend.
2. In other words, variables that change before real output changes are leading indicators.
3. So the correct choice is the leading indicator.
4. Lagging indicators change after, and coincident/concurrent indicators change simultaneously.
_Source: ICAI BoS CA Foundation Paper 4 Business Economics, Ch 5 "Business Cycles", p.4_
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