D076 mODULE 2: FINANCIAL MARKETS AND INSTITUTIONS

coincident indicators - are collected and analyzed as economic shifts happen and include GDP and personal income. flat yield curve: - results when both short-term and long-term bonds have the same interest rate, indicating that the economy is in a transitional state. In what way are coincident indicators useful? - They are analyzed during economic shifts to provide information about the current state of the economy. Correct: coincident indicators help analysts see the big picture of economic trends. Lagging indicators - change after the economy changes and include unemployment rate and CPI. Leading indicators - change before the economy changes and include yield curve and stock market return. normal yield curve: - Results when longer maturity bonds have higher interest rates than shorter ones. it reflects the expectation that the economy will grow in the future along with rising inflation. the consumer price index (CPI): - measures changes in the inflation rate. when the CPI decreases, it indicates deflation ; when it increases, it indicates inflation.