Question

The owner of a lumber company notices that a large number of home building permits have been issued, so he decides to prepare for an increase in sales by increasing his inventory. In this case, the number of home building permits serves as a _________ economic indicator.

A) Leading
B) Lagging
C) Coincident
D) Counter

Answer 1

The number of home building permits serves as a leading economic indicator, indicating a potential increase in sales for the lumber company.

Step-by-step explanation:

The number of home building permits serves as a leading economic indicator. Leading indicators attempt to predict the future direction of the economy.

In this case, an increase in the number of home building permits indicates a potential increase in home construction, which in turn suggests a potential increase in sales for the lumber company. Therefore, the owner of the lumber company decides to increase his inventory to prepare for the expected increase in sales.