Which of the following macroeconomic variables is procyclical and lags the business cycle?
A)business fixed investment
B)employment
C)stock prices
D)nominal interest rates

Question

Quizplus · Accepted Answer

Nominal interest rates are procyclical, as they tend to rise in expansions and fall in recessions. However, they typically lag behind the business cycle because it takes time for monetary policy actions to affect interest rates. Business fixed investment and employment are also procyclical, but they typically move more or less in line with the business cycle rather than lagging behind it. Stock prices can be procyclical or countercyclical depending on the period and factors such as investor sentiment and expectations.

Which of the Following Macroeconomic Variables Is Procyclical and Lags