Take another look at the list of “Leading Economic Indicators” from the lesson. Which indicators do you think are the best indicators of the future health of the economy? Explain
Leading indicators are indicators that typically modify before the financial system changes in entirety. They are commonly considered to be beneficial to use in predicting the economy on in the short run. One of the most significant indicators in the index of Leading Economic Indicators is the Stock market returns. Usually the stock market starts to slope downwards before the economy declines significantly. However, it has the tendency to go upwards even before the economy starts recovering. Other than this indicator, other important indicators utilized by the financial markets are the rate of interest, rate of unemployment, manufacturing rate, and building permits (Backhouse, Dudley-Evans, & Henderson, 1993). The main role played by these indicators is to assist, modify and develop a better future. In simpler words, these indicators are there to give us a warning to move on with care in making any economic decision.
Financial investors utilize all the knowledge they have to make their big decisions. Their investment strategies alter according to the suggested results of the leading economic indicators be it the betterment or the worsening of the economy. Irrespective of their accurateness, leading indicators are supportive because pronounce trouble before it heads you.
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