Which part of real GDP fluctuates most over the course of the business cycle?
A)consumption expenditures
B)government expenditures
C)investment expenditures
D)net exports

Question

Quizplus · Accepted Answer

Investment expenditures tend to fluctuate the most over the course of the business cycle. During expansions, firms invest in new capital equipment and machinery to increase their production capacity which tends to lead to a boost in investment expenditures. However, during recessions, firms tend to reduce their investment expenditures in order to conserve cash and cut costs. This makes investment expenditures very volatile over the business cycle.

Which Part of Real GDP Fluctuates Most Over the Course