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Which of the following is given in the chapter as an example of a coincident indicator?
ABuilding permits for houses
BUnemployment rate
CNew orders for plant and equipment
DGross Domestic Product
Answer & Solution
Correct answer: D. Gross Domestic Product
1. Coincident indicators move simultaneously with the business cycle and describe its current state.
2. The chapter lists GDP, industrial production, inflation, personal income, retail sales and stock prices as coincident.
3. So Gross Domestic Product is the correct example.
4. Building permits and new orders are ruled out: they are leading indicators.
5. The unemployment rate is ruled out: it is a lagging indicator.
_Source: ICAI BoS CA Foundation Paper 4 Business Economics, Ch 5 "Business Cycles", p.5_
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