A lagging variable can be recognized by the fact that
A) its persistence is smaller than that of GDP.
B) its turning points happen before the turning points of GDP.
C) the turning points of GDP happen before its turning points.
D) its persistence is larger than that of GDP.

Question

Quizplus · Accepted Answer

A lagging variable is one that follows changes in the economy and whose turning points happen after those of GDP. Therefore, the correct choice is C, which states that the turning points of GDP happen before the turning points of the lagging variable. Choices A and D, which relate to the persistence of the variable, are not necessarily indicative of lagging variables. Choice B is also incorrect, as a leading variable would have turning points that happen before those of GDP.

A Lagging Variable Can Be Recognized by the Fact That