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Homework answers / question archive / An economic variable that moves in the same direction as aggregate economic activity (up in expansions, down in contractions) is called A
An economic variable that moves in the same direction as aggregate economic activity (up in expansions, down in contractions) is called
A. a coincident variable.
B. transcendental.
C. procyclical.
D. countercyclical.
The answer is C).
In business cycles, a variable could be pro-cyclical, counter-cyclical, or acyclical. A variable is pro-cyclical if it has a positive correlation with output, counter-cyclical if a negative correlation with output, and acyclical if no correlation with output. Therefore, a variable that moves in the same direction as aggregate economic activity is pro-cyclical.