Canadian Securities Course (CSC) Practice Exam

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Which indicators peak and trough before the overall economy, acting as early signals of economic changes?

  1. Coincident indicators

  2. Lagging indicators

  3. Fiscal policy

  4. Leading indicators

The correct answer is: Leading indicators

Leading indicators are economic indicators that give early signals of changes in the overall economy, allowing businesses and individuals to prepare for potential changes. Unlike leading indicators, coincident indicators follow the economy and reflect its current state. Lagging indicators reflect changes that have already occurred in the economy and are considered to be less useful for predicting future changes. Fiscal policy refers to government decisions on taxation and spending, which can impact the economy but are not necessarily early signals of changes. Therefore, the indicators that peak and trough before the overall economy are leading indicators, making option D the correct answer.

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