Future Business Leaders of America (FBLA) Business Management Practice Test

Which of the following best describes a leading economic indicator?

1. A metric that reflects current economic conditions

2. A metric used to predict economic trends

3. A historical measurement of economic performance

4. A metric that shows long-term growth

The correct answer is: A metric used to predict economic trends

A leading economic indicator is a statistic that is used to forecast future economic activity. It provides insights into the direction the economy is likely to head, allowing policymakers, businesses, and investors to make informed decisions. Leading indicators include metrics such as stock market performance, building permits, and new manufacturing orders, which typically change before the economy as a whole does. This predictive capability is what distinguishes leading indicators from other types of economic measures, making option B the correct answer. In contrast, the other options refer to metrics that describe current conditions, historical performance, or long-term growth, which do not possess the ability to anticipate changes in economic activity in the same way that leading indicators do. Thus, option B accurately captures the essence of leading economic indicators by emphasizing their role in predicting economic trends.