a. a large part of real GDP, yet it accounts for a small share of the fluctuation in real GDP.
b. a small part of real GDP, yet it accounts for a large share of the fluctuation in real GDP.
c. a small part of real GDP, so it accounts for a small share of the fluctuation in real GDP.
d. a large part of real GDP, so it accounts for a large share of the fluctuation in real GDP.
1 answer
The correct answer is:
b. a small part of real GDP, yet it accounts for a large share of the fluctuation in real GDP.
Investment spending is typically a smaller component of total GDP, but it is subject to more volatility compared to other components like consumption. This volatility leads it to have a significant impact on fluctuations in real GDP.
