If deviations from trend in a macroeconomic variable are positively correlated with deviations from trend in real GDP,that variable is said to be
A) useful in predicting future movements in real GDP.
B) procyclical.
C) countercyclical.
D) acyclical.
E) uncorrelated.

Question

Quizplus · Accepted Answer

A variable that is positively correlated with real GDP deviations from trend is procyclical, meaning it moves in the same direction as the business cycle. Therefore, it can be useful in predicting future movements in real GDP.

If Deviations from Trend in a Macroeconomic Variable Are Positively