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)uncorrelated.
E)acyclical.

Question

Quizplus · Accepted Answer

A variable that is positively correlated with deviations from trend in real GDP is procyclical. This means that it tends to move in the same direction as the business cycle, increasing during economic expansions and decreasing during contractions. It is useful in predicting future movements in real GDP, as changes in the variable can signal changes in the overall economy.

If Deviations from Trend in a Macroeconomic Variable Are Positively