If deviations from trend in a macroeconomic variable are positively correlated with deviations from trend in real GDP, that variable is said to be
A) useful in predicting future movements in real GDP.
B) procyclical.
C) countercyclical.
D) acyclical.
E) uncorrelated.

Question

Quizplus · Accepted Answer

A procyclical variable is positively correlated with real GDP, meaning that it moves in the same direction as the business cycle. This suggests that the variable can be useful in predicting future movements in real GDP. So, the best choice is B.

If Deviations from Trend in a Macroeconomic Variable Are Positively