According to the National Bureau of Economic Research an increase in risk premiums is
A)a leading indicator of the business cycle.
B)a lagging indicator of the business cycle.
C)a coincident indicator of the business cycle.
D)unrelated to the business cycle.

Question

Quizplus · Accepted Answer

An increase in risk premiums is considered a leading indicator of the business cycle. This is because when investors perceive higher risk in the market, they demand higher returns on their investments, which can lead to lower stock prices and lower economic growth in the future. Therefore, an increase in risk premiums can signal a weakening of the economy and a potential recession.

According to the National Bureau of Economic Research an Increase