Question

Why do you think the change in the index of labor cost per unit of output is a useful lagging indicator of the macro-economy? (See Table 12.2 .)

Short answer

Answer

This shows that the progress of the extent of the economy

Step-by-step solution

Step by Step Solution Step 1: Definition

The index of consumer’s expectations captures consumer’s short-term outlook and sentiment about the performance of the economy. It is made up of averages the Consumer Confidence Index that deals with short-term term outlook for business, employment, and income.

Explanation of the index of consumer expectations

Because the expansion is accompanied by the hike in wages of laborers. By the time the wages have already increased due to high demand, the boom has already progressed.