Question

Identify which economic indicator should be used to track each of the following. a. The overall size of the economy the unemployment rate real GDP nominal GDP real GDP growth b. Labor market performance inflation business confidence the unemployment rate consumer confidence c. The future trajectory of economic activity the employment cost index real GDP inflation annual growth of the S&P 500 d. Wages and benefits business confidence real GDP the employment cost index consumer confidence

Answer 1

Answer:

a. The overall size of the economy ⇒ real GDP

The real GDP is adjusted for inflation and so would show the overall size of the economy in more accurate terms.

b. Labor market performance ⇒ the unemployment rate

The unemployment rate is best used to show how the labor market is performing because it shows the amount of people who are employed and those who are not in a given period.

c. The future trajectory of economic activity ⇒ annual growth of the S&P 500

The S&P 500 shows the performance of 500 large companies in the U.S. Their performance can be used to anticipate the trajectory of future economic activity because they influence the economy due to their large size.

d. Wages and benefits ⇒ the employment cost

The employment cost shows the wages and benefits that have to be paid to labor.