You are employed by the state bureau of economic development. There is a demand for a leading economic index to review past economic activity and to forecast future economic trends in the state. You decide that several key factors should be included in the index: number of new businesses started during the year, number of business failures, state income tax receipts, college enrollment, and the state sales tax receipts. Here are the data for 2000 and 2012.
2000 2012
New businesses 1,200 1,150
Business failures 850 250
State income tax receipts ($ millions) 205.8 153.6
College student enrollment 242,199 291,041
State sales tax ($ millions) 47.6 67.9
The weights you assign are: new businesses 15%, business failures 10%, income tax 33%, enrollment 20% and sales tax 22%.
a. Compute the leading economic indicator for 2012. (Round your answer to 2 decimal places.)
Leading economic indicator = %
b. Interpret the indexes. (Round your answer to 2 decimal places.)
Economic activity has (Click to select)decreasedincreased % between 2000 and the 2012.

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ogbe2k3 ogbe2k3 · Answer 1 · 2020-05-16T03:59:33+02:00

Answer:

(a) the leading economic indicator is 97.14% (b) the economic activity has decreased from - 0.286% or 2.86% between 200 and 2012

Explanation:

Solution

The economic indicator for the new business is:

1150/1200 *100 * 15%

= 0.9583 *100 * 0.15

= 95.83 * 0.15

=14.37

Now,

The economic indicator for business failures is:

250/850 * 100 * 33%

= 0.2941 * 100 * 0.10

29.41 * 0.10

=2.941

The economic indicator for state income tax receipts is defined as:

153.6/205.8* 100 * 33%

=0.7463 * 100 * 0.33

= 73.63 * 0.33

= 24.62

Note: Kindly find an attached copy of my work for part of the solution given to this question.