Why the indicators move up and one moves down

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The following table presents data on three leading indicators for a three-month period. Construct the composite index (with each indicator assigned equal weight) and the diffusion index.

Month Leading Indicator A Leading Indicator B Leading Indicator C

1 100 200 30

2 110 230 27

3 120 240 33

Just construct the diffusion index from month 2 to 3. In this problem, we have three leading indicators. The diffusion index from month 1 to 2 is 66.7 (=2/3) because two indicators move up and one moves down.

Reference no: EM13223944

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