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LSDefine
Simple English definitions for legal terms
indicator
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A quick definition of indicator:
An indicator is a tool that helps us understand how the stock market or economy is doing. There are different types of indicators, such as leading indicators that predict future changes, lagging indicators that show changes that have already happened, and coincident indicators that show changes happening at the same time as overall conditions. Economic indicators are specific types of indicators that measure things like housing starts to give us an idea of how the economy is doing.
A more thorough explanation:
An indicator is a tool used to analyze market performance or economic conditions. It can be an average or index that shows a correlation to market trends or economic conditions. There are different types of indicators, including:
- Coincident indicator: An economic or market-activity index that shows changing trends near the same time that overall conditions begin to change.
- Lagging indicator: An index that indicates a major stock-market change sometime after the change occurs.
- Leading indicator: A quantifiable index that predicts a major stock-market change.
- Economic indicator: A statistical measure used to describe the state of the economy or to predict its direction.
Examples of economic indicators include housing starts, new-home sales, and interest rates. Housing starts and new-home sales are lagging indicators because they tend to respond to the direction of the economy. Interest rates are leading indicators because they tend to predict the future direction of the economy.
For example, if interest rates are low, it may indicate that the economy is growing and people are borrowing more money. On the other hand, if interest rates are high, it may indicate that the economy is slowing down and people are borrowing less money.