Procyclical refers to:
A) A variable that is above trend when GDP is above trend.
B) A variable that is equal to the GDP trend.
C) The economy growing above trend.
D) A variable that is below trend when GDP is above trend.

Question

Quizplus · Accepted Answer

Procyclical means that the variable moves in the same direction as the business cycle, so if GDP is above trend, a procyclical variable will also be above trend. Therefore, option A is the correct choice as it describes a procyclical variable.

Procyclical Refers To