Introduction

Business cycle indicators: Activities

1. Business cycle indicators are identified by comparing the turning points of composite time series with the reference turning points.

Incorrect.  The statement is false.

Business cycle indicators are identified by comparing the turning points of individual time series with the reference turning points.

Correct.  The statement is indeed false.

Business cycle indicators are identified by comparing the turning points of individual time series with the reference turning points.

2. If the specific turning points of an individual time series tend to coincide with the reference turning points, the relevant variable is regarded as a …

Incorrect.  It is a coincident indicator.

A coincident indicator is an individual time series whose specific turning points tend to coincide with the reference turning points.

A leading indicator is an individual time series whose specific turning points tend to precede the reference turning points.

[Insert video clip]

Correct.  It is a coincident indicator.

A coincident indicator is an individual time series whose specific turning points tend to coincide with the reference turning points.

[Insert video clip]

Incorrect.  It is a coincident indicator.

A coincident indicator is an individual time series whose specific turning points tend to coincide with the reference turning points.

A lagging indicator is an individual time series whose specific turning points tend to precede the reference turning points.

[Insert video clip]

3. If the specific turning points of an individual time series tend to precede the reference turning points, the relevant variable is regarded as a …

Correct.  It is a leading indicator.

A leading indicator is an individual time series whose specific turning points tend to precede the reference turning points.

[Insert video clip]

Incorrect.  It is a leading indicator.

A leading indicator is an individual time series whose specific turning points tend to precede the reference turning points.

A coincident indicator is an individual time series whose specific turning points tend to coincide with the reference turning points.

[Insert video clip]

Incorrect.  It is a leading indicator.

A leading indicator is an individual time series whose specific turning points tend to precede the reference turning points.

A lagging indicator is an individual time series whose specific turning points tend to precede the reference turning points.

[Insert video clip]

4. If the specific turning points of an individual time series tend to occur after the reference turning points, the relevant variable is regarded as a …

Incorrect.  It is a lagging indicator.

A lagging indicator is an individual time series whose specific turning points tend to precede the reference turning points.

A leading indicator is an individual time series whose specific turning points tend to precede the reference turning points.

[Insert video clip]

Incorrect.  It is a lagging indicator.

A lagging indicator is an individual time series whose specific turning points tend to precede the reference turning points.

A coincident indicator is an individual time series whose specific turning points tend to coincide with the reference turning points.

[Insert video clip]

Correct.  It is a lagging indicator.

A lagging indicator is an individual time series whose specific turning points tend to precede the reference turning points.

[Insert video clip]

5. A time series such as the value of non-residential building completed is regarded as a (leading indicator, coincident indicator, lagging indicator) since the peak of the time series is reached (before, after, at the same time as) the peak of the reference cycle.

Incorrect.  Think again.

Incorrect.  Think again.

Correct.  It is a lagging indicator.

Incorrect.  Think again.

Correct.  That is why it is a lagging indicator.

Incorrect.  Think again.

6. A time series such as total formal non-agricultural employment is regarded as a (leading indicator, coincident indicator, lagging indicator) since the peak of the time series is reached (before, after, at the same time as) the peak of the reference cycle.

Incorrect.  Think again.

Correct.  It is a coincident indicator.

Incorrect.  Think again.

Incorrect.  Think again.

Incorrect.  Think again.

Correct.  That is why it is a coincident indicator.

7. A time series such as number of residential business plans passed is regarded as a (leading indicator, coincident indicator, lagging indicator) since the peak of the time series is reached (before, after, at the same time as) the peak of the reference cycle.

Correct.  It is a leading indicator.

Incorrect.  Think again.

Incorrect.  Think again.

Correct.  That is why it is a leading indicator.

Incorrect.  Think again.

Incorrect.  Think again.

8. A composite leading indicator is compiled by combining the cyclical components of indicators for all the groups.

Incorrect.  The statement is false.

A composite leading indicator is compiled by combining the cyclical components of leading indicators and not for all the indicators (lagging and coincident).

Correct.  The statement is indeed false.

A composite leading indicator is compiled by combining the cyclical components of leading indicators and not for all the indicators (lagging and coincident).

The following activity is based on the Composite Business Cycle Indicators – March 2020 report of the South African Reserve Bank.  Read through the report and answer the questions:

9.a By how much did the composite leading business cycle indicator decrease?

Correct.  It is 0,3%.

[Insert video clip]

Incorrect. It is 0,3%.

9.b All the different leading business cycle indicators made a negative contribution to the composite leading business cycle indicator.

Incorrect.  The statement is false.

Some indicator did make a positive contribution.

[Insert video clip]

Correct.  The statement is indeed false.

Some indicator did make a positive contribution.

[Insert video clip]

9.c Which one of the following leading indicators made the largest negative contribution to the composite leading business cycle indicator?

Incorrect. Think again.

Incorrect. Think again.

Correct.

[Insert video clip]

Incorrect. Think again.

Incorrect. Think again.