Series 50: Exercise

Exercise

Answer the following questions

1. 1. Which of the following leading indicators does not indicate an expansion of the economy?
2. A. Growing business inventories
3. B. Increase in building permits
4. C. Decrease in unemployment claims
5. D. Narrowing liquidity spread
6. 2. Why are housing starts an important leading indicator?
7. I. Because construction projects take at least a few months, housing starts indicate optimism on the part of investors and consumers.
8. II. Construction projects have a ripple effect—new workers may be hired and materials must be purchased, boosting the economy.
9. III. Housing is the biggest industry within the GDP.
10. IV. The Fed may react by reducing interest rates to make money less expensive to businesses and potential homeowners.