What does it mean to be countercyclical?
countercyclical in American English (ˌkaʊntərˈsɪklɪkəl ) adjective. designating or of fiscal policy that attempts to minimize extreme fluctuations in the business cycle, as by increasing spending and reducing taxes during periods of decline.
What does countercyclical mean in economics?
(economics) Moving in the direction opposite to that of the overall state of an economy. The unemployment rate is countercyclical in the sense that it rises when economic growth is low and vice versa.
What is a countercyclical industry?
What is counter-cyclical industry? Counter-cyclical or defensive industries are those that do well in economic downturns, since demand for their products and services continue regardless of the economy. It’s a niche industry financial performance negatively correlated to the overall state of the economy.
What is a countercyclical indicator?
A countercyclical economic indicator is a time series, per se or in conjunction with another time series, that moves simultaneously with and in the opposite direction of the up and down movements related to the economy as a whole or to a part of it.
What is a countercyclical policy?
Counter-cyclical fiscal policy refers to the steps taken by the government that go against the direction of the economic or business cycle. Thus, in a recession or slowdown, the government increases expenditure and reduces taxes to create a demand that can drive an economic boom.
What companies are countercyclical?
Discount retailers, alcohol brands, and other “last resort” businesses such as payday lenders are generally cited as the prime examples of countercyclical businesses.
What is counter-cyclical diversification?
Countercyclical stocks usually refer to stocks that move in opposition to the market. They are important in achieving a diversified portfolio, as they help balance out earnings in any type of market. For instance, regardless of the stock market, food or medicine demands remain relatively stable.
What is counter-cyclical sales pattern?
Countercyclical refers to a behavioral pattern of investment behavior or intent which acts contrary to dominant market investment trends. A countercyclical investor typically buys securities when their price falls and sells when prices go up.
What are countercyclical variables?
That is, quantities that tend to increase when the overall economy is slowing down are classified as ‘countercyclical’. Unemployment is an example of a countercyclical variable. Similarly, business failures and stock market prices tend to be countercyclical.
What is cyclicality of fiscal policy?
Cyclicality of fiscal policy refers to the direction of change in government expenditure and taxes relative to economic/output conditions. The fiscal policy is considered pro-cyclical, if it is expansionary during economic booms and contractionary during recessions.
Which is an example of countercyclical fiscal policy quizlet?
An example of countercyclical fiscal policy is: reducing government spending when the economy is operating above potential. Governments are said to fine tune the economy when they attempt to use fiscal policy to: keep the economy always at its target or potential level of income.