Which of these economic variables is procyclical?
A)consumer spending
B)stock prices
C)the government bond spread
D)all of the above
E)none of the above

Question

Quizplus · Accepted Answer

Procyclical economic variables are those that move in the same direction as the overall economy. During periods of economic expansion, consumer spending typically increases as people feel more confident about their financial situations, making it procyclical. Stock prices generally rise during economic upturns due to increased profits and investor optimism, making them procyclical as well. The government bond spread, which is the difference in yields between government bonds and other types of debt, can narrow during economic expansions as investors seek higher returns in riskier assets, indicating a procyclical behavior. Therefore, all the options listed are examples of procyclical economic variables.

Which of These Economic Variables Is Procyclical