Economic Indicators
KNOWLEDGE EXPECTED OF: QAFP® Professionals
Highest Knowledge Level: Awareness
Knowledge Levels and Associated Verbs
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Awareness
The state of being aware that something exists / to have familiarity with a particular activity or subject
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Understanding
To comprehend the general relationship of particulars / to have an expertise with how something works
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Application
Ability to put information to use / to use knowledge for relevant, practical purposes
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Evaluation
To judge or conclude by utilizing data / a systematic determination of something’s worth or significance
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Define
To state exactly the meaning of
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Identify
To be aware of / to recognize and correctly name / to locate an appropriate resource
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Explain
To make clear the meaning of / to describe something in more detail or reveal relevant facts or ideas related to it
|
Determine
To ascertain / to come to a decision, such as by investigation or reasoning
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Compare
To note the similarities and differences between two or more things
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Estimate
To determine an approximate value for
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Calculate
To find the value using mathematics
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Convert
To change from one form or purpose to another
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Evaluate
To reach a conclusion or make a through careful study
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Interpret
To give the meaning of / to construe or understand / to translate orally
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Hold cursor over or click on each term to read its definition.
Leading Economic Indicators
- Define a leading economic indicator.
- Identify indicators that lead the economic cycle, such as:
- Stock market
- Housing starts
- Commodity prices
- Manufacturers’ new orders
- The yield curve
- Identify how leading indicators may signal the next economic cycle.
The Yield Curve as a Leading Indicator
- Define the yield curve.
- Identify the significance of the slope of the yield curve.
- Upward-sloping / normal
- Downward-sloping / inverted
- Horizontal / flat
- Identify how the slope of the yield curve may signal potential changes in the economic cycle.
Coincident Economic Indicators
- Define a coincident economic indicator.
- Identify indicators that coincide with the economic cycle, such as:
- Gross Domestic Product
- Personal income
- Retail sales
- Industrial production
- Manufacturing and trade sales volume
- Number of employees of non-agricultural payroll
- Identify how coincident indicators may confirm the current phase of the economic cycle.
GDP as a Coincident Indicator
- Define Gross Domestic Product (GDP).
- Identify the components of GDP.
- Consumer spending
- Investment spending
- Government spending
- Net exports
- Define the types of GDP.
- Nominal
- Real
- GDP per Capita
- Identify the factors that may impact GDP growth, such as:
- Political change
- International conflict
- Technological advancements
- Medical discoveries or disease
- Environmental disasters
- Terrorism
- Geopolitical factors
- Domestic government policy (sanctions, protectionism)
- Foreign government policy
- Foreign fiscal policy
- Foreign monetary policy
- Define Gross National Product.
- Identify the potential effects that a change in Gross Domestic Product may have on inflation, interest rates, exchange rates and asset values.
Lagging Economic Indicators
- Define a lagging economic indicator.
- Identify indicators that lag the economic cycle, such as:
- Unemployment rate
- Duration of unemployment
- Changes in the Consumer Price Index (Rate of Inflation)
- Average prime interest rate charged by banks
- Level of inventory
- Ratio of consumer credit to personal income
- Level of private sector capital investment
- Exchange rate
- Identify how lagging indicators may confirm that an economic cycle has passed.
The Consumer Price Index as a Lagging Indicator
- Define types of price changes, such as:
- Inflation
- Deflation
- Disinflation
- Hyperinflation
- Identify measurements of inflation, such as:
- Consumer Price Index
- Core Consumer Price Index
- General Level of Prices
- Identify the potential effects that inflation and deflation may have on macroeconomic variables (such as Gross Domestic Product, interest rates, exchange rates) and asset values.
Unemployment Rate as a Lagging Indicator
- Define the unemployment rate.
- Identify the potential effects that a change in Gross Domestic Product, inflation, interest rates and exchange rates may have on unemployment.
Exchange Rate as a Lagging Indicator
- Define an exchange rate.
- Define a currency appreciation.
- Define a currency depreciation.
- Identify who benefits and who is disadvantaged from an exchange rate change.
- Appreciation
- Depreciation
- Identify the expected effects that a change in exchange rates may have on Gross Domestic Product, inflation, interest rates and asset values.
KNOWLEDGE EXPECTED OF: CFP® Professionals
Highest Knowledge Level: Application
Knowledge Levels and Associated Verbs
|
Awareness
The state of being aware that something exists / to have familiarity with a particular activity or subject
|
Understanding
To comprehend the general relationship of particulars / to have an expertise with how something works
|
Application
Ability to put information to use / to use knowledge for relevant, practical purposes
|
Evaluation
To judge or conclude by utilizing data / a systematic determination of something’s worth or significance
|
||||||
|---|---|---|---|---|---|---|---|---|---|
|
Define
To state exactly the meaning of
|
Identify
To be aware of / to recognize and correctly name / to locate an appropriate resource
|
Explain
To make clear the meaning of / to describe something in more detail or reveal relevant facts or ideas related to it
|
Determine
To ascertain / to come to a decision, such as by investigation or reasoning
|
Compare
To note the similarities and differences between two or more things
|
Estimate
To determine an approximate value for
|
Calculate
To find the value using mathematics
|
Convert
To change from one form or purpose to another
|
Evaluate
To reach a conclusion or make a through careful study
|
Interpret
To give the meaning of / to construe or understand / to translate orally
|
Hold cursor over or click on each term to read its definition.
Leading Economic Indicators
- Define a leading economic indicator.
The Yield Curve as a Leading Indicator
- Define the yield curve.
Coincident Economic Indicators
- Define a coincident economic indicator.
GDP as a Coincident Indicator
- Define Gross Domestic Product (GDP).
- Define the types of GDP.
- Nominal
- Real
- GDP per Capita
- Identify the factors that may impact GDP growth, such as:
- Political change
- International conflict
- Technological advancements
- Medical discoveries or disease
- Environmental disasters
- Terrorism
- Geopolitical factors
- Domestic government policy (sanctions, protectionism)
- Foreign government policy
- Foreign fiscal policy
- Foreign monetary policy
- Define Gross National Product.
Lagging Economic Indicators
- Define a lagging economic indicator.
The Consumer Price Index as a Lagging Indicator
- Define types of price changes, such as:
- Inflation
- Deflation
- Disinflation
- Hyperinflation
Unemployment Rate as a Lagging Indicator
- Define the unemployment rate.
Exchange Rate as a Lagging Indicator
- Define an exchange rate.
- Define a currency appreciation.
- Define a currency depreciation.
Additional Knowledge Expected of CFP Professionals
Leading Economic Indicators
- Explain indicators that lead the economic cycle, such as:
- Stock market
- Housing starts
- Commodity prices
- Manufacturers’ new orders
- The yield curve
- Explain how leading indicators may signal the next economic cycle.
The Yield Curve as a Leading Indicator
- Explain the significance of the slope of the yield curve.
- Upward-sloping / normal
- Downward-sloping / inverted
- Horizontal / flat
- Explain how the slope of the yield curve may signal potential changes in the economic cycle.
Coincident Economic Indicators
- Explain indicators that coincide with the economic cycle, such as:
- Gross Domestic Product
- Personal income
- Retail sales
- Industrial production
- Manufacturing and trade sales volume
- Number of employees of non-agricultural payroll
- Explain how coincident indicators may confirm the current phase of the economic cycle.
GDP as a Coincident Indicator
- Explain the components of GDP.
- Consumer spending
- Investment spending
- Government spending
- Net exports
- Compare Gross Domestic Product and Gross National Product.
- Explain the potential effects that a change in Gross Domestic Product may have on inflation, interest rates, exchange rates and asset values.
Lagging Economic Indicators
- Explain indicators that lag the economic cycle, such as:
- Unemployment rate
- Duration of unemployment
- Changes in the Consumer Price Index (Rate of Inflation)
- Average prime interest rate charged by banks
- Level of inventory
- Ratio of consumer credit to personal income
- Level of private sector capital investment
- Exchange rate
- Explain how lagging indicators may confirm that an economic cycle has passed.
The Consumer Price Index as a Lagging Indicator
- Explain measurements of inflation, such as:
- Consumer Price Index
- Core Consumer Price Index
- General Level of Prices
- Compare measurements of inflation.
- Explain the potential effects that inflation and deflation may have on macroeconomic variables (such as Gross Domestic Product, interest rates, exchange rates) and asset values.
Unemployment Rate as a Lagging Indicator
- Explain the potential effects that a change in Gross Domestic Product, inflation, interest rates and exchange rates may have on unemployment.
Exchange Rate as a Lagging Indicator
- Convert between currencies for a given exchange rate.
- Explain who benefits and who is disadvantaged from an exchange rate change.
- Appreciation
- Depreciation
- Explain the expected effects that a change in exchange rates may have on Gross Domestic Product, inflation, interest rates and asset values.
previous / Macroeconomics Theory