4. Discerning the future direction of the economy Aa Aa Where is the Economy Going? Knowing how well the economy is doing and where it is going next is critical to positioning both you and your investments appropriately. This means that knowing what economic indicators are and how to interpret them is critical to achieving your long-term financial goals and objectives. What is an economic indicator, and what does it do? An economic indicator is that: Serves to indicate the total amount of goods and services produced within an economy during a given period of time Suggests the current and future condition and the future direction of an economy Which of the following are examples of economic indicators? Check all that apply. The economy's inflation rate The economy's unemployment rate The economy's personal finance index Economic indicators can vary depending on the frequency of their reporting-such as monthly, quarterly, or annually-and their relationship with the economy. What are procyclical, countercyclical, and leading economic indicators? The value of countercyclical indicator moves in the direction as the economy's condition, whereas the value of a procyclical indicator moves in the direction as the economy's condition. In contrast, the value of a indicator changes before the economy's condition improves or worsens. Which of the following statements regarding procyclical, countercyclical, and leading economic indicators is correct? Check all that apply. An economy's unemployment rate is an example of a procyclical indicator. Examples of leading economic indicators are building permits, the weekly first-time claims for unemployment insurance, and factory orders. The fact that the unemployment rate increases as the economy's condition worsens illustrates why the unemployment rate is a countercyclical indicator