Canadian Securities Course (CSC) Practice Exam

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What do lagging economic indicators do in relation to the economy?

  1. Lead the economy

  2. Change at the same time as the market

  3. Change after the economy

  4. Cannot be determined

The correct answer is: Change after the economy

Economic indicators are measurements or statistics that provide insight into the health of the economy. Lagging indicators are variables that change after the economy has already experienced a change. These indicators are useful to understand the impacts and effects of changes in the economy. Option A, leading the economy, refers to leading indicators which anticipate future changes in the economy. Option B, changing at the same time, does not accurately describe what lagging indicators do. And option D, cannot be determined, is incorrect because the definition of lagging indicators provides a clear explanation.

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