the method of forecasting with leading indicators can be critizied for? a. Occasionally forecasting a recession when none ensues b. forecasting the direction of the economy but not the size of the change in economic c. frequent revisions of data after original publication d. all of the above Solution Ans =a The statistics that give valuable information regarding expansions and contractions of business cycles can be grouped into three --lagging, coincident, and leading. Leading economic indicators tend to move up or down a few months prior business-cycle expansions and contractions. Coincident economic indicators tend to reach their peaks and troughs simultaneously as business cycles. Lagging economic indicators tend to rise or fall a few months post business-cycle expansions and contractions. The individual indicators are useful by themselves, however when combined as composite measures, they deliver greater insight into the business cycle activity whereas the leading indicators tend to predict business cycles, they are\'nt always correct. In fact, the leading indicators have actually predicted \"12 of the last 9 contractions in business activity.\" That is, they predicted 3 contractions that never really occured. .

1. the method of forecasting with leading indicators can be critizied for?
a. Occasionally forecasting a recession when none ensues
b. forecasting the direction of the economy but not the size of the change in economic
c. frequent revisions of data after original publication
d. all of the above
Solution
Ans =a
The statistics that give valuable information regarding expansions and contractions of business
cycles can be grouped into three --lagging, coincident, and leading. Leading economic indicators
tend to move up or down a few months prior business-cycle expansions and contractions.
Coincident economic indicators tend to reach their peaks and troughs simultaneously as business
cycles. Lagging economic indicators tend to rise or fall a few months post business-cycle
expansions and contractions. The individual indicators are useful by themselves, however when
combined as composite measures, they deliver greater insight into the business cycle activity
whereas the leading indicators tend to predict business cycles, they are'nt always correct. In fact,
the leading indicators have actually predicted "12 of the last 9 contractions in business activity."
That is, they predicted 3 contractions that never really occured.