b Wha is the difference between procyclical I and acyclical

b) Wha is the difference between procyclical, I and acyclical variables? Explain. Define the type of each variable listed below (Instruction: do not rewrite the list, just put the numbers for each type

Solution

When there exist a positive correlation between two variables, the variables are said to be pro cyclical. Two variables are countercyclical if there exists a negative correlation between them and acyclical if there is no correlation and the two variables are independent of each other. In terms of average economic activity or business cycle the followings are divided in to three catagories:

In this way the following are categorised below:

Procyclical

Acyclical

Countercyclical

(x)

(xii)

(xiv)

(xv)

(xvi)

(xvii)

(xviii)

(xx)

(xxii)

(xxiii)

(xiii)

(xxi)

(viii)

(ix)

(xi)

(xix)

Procyclical	Acyclical	Countercyclical
(x) (xii) (xiv) (xv) (xvi) (xvii) (xviii) (xx) (xxii) (xxiii)	(xiii) (xxi)	(viii) (ix) (xi) (xix)