Which of the following is NOT an indicator of the business cycle?

• A. Inflation rate
• B. Unemployment rate
• C. Gross Domestic Product (GDP)
• D. Exchange rate

Answer: (D)

Verified step by step guidance

1. Step 1: Understand what the business cycle represents. The business cycle refers to the fluctuations in economic activity over time, typically measured by changes in output, employment, and prices.
2. Step 2: Identify common indicators of the business cycle. These usually include the unemployment rate, inflation rate, and Gross Domestic Product (GDP), as they reflect economic expansions and contractions.
3. Step 3: Analyze each option to see if it directly reflects economic fluctuations. Unemployment rate changes with economic activity, inflation rate reflects price level changes during expansions or recessions, and GDP measures total economic output.
4. Step 4: Consider the exchange rate. While it can be influenced by economic conditions, it is primarily a financial market variable and does not directly indicate the phases of the business cycle.
5. Step 5: Conclude that the exchange rate is NOT a standard indicator of the business cycle, unlike the other options which directly measure economic performance.