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 2018.

a. Decide on the weights to be applied to each item in the leading index.

b. Compute the leading economic indicator for 2018.

c. Interpret the indexes.

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2000 2018 New businesses 1,088 1,162 Business failures 627 520 State income tax receipts ($ millions) College student enrollment State sales tax ($ millions) 191.7 162.6 242,119 290,841 41.6 39.9