which expenditure component of real gdp fluctuates the most over the course of the business cycle

Why did the core rate of inflation exclude food and energy prices?

Economics questions and answers. a)Which part of real GDP fluctuates most over the course of the business cycle? consumption expenditures government expenditures investment expenditures net exports b)Monetary policy can DIRECTLY affect which interest rate? Group of answer choices the prime lending rate federal funds interest rate the 10 year ...

How do local governments affect the aggregate demand curve?

Over the business cycle investment fluctuates more than consumption. ... Which component of real GDP fluctuates the most over the course of the business cycle? A. consumption B. government expenditure C. investment D. net exports. C. According to the wealth effect, one of the reasons for the slope of the aggregate demand curve is that falling ...

How does a decrease in the price level affect the aggregate quantity of goods and services demanded?

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. c. investment expenditures. If output is above its natural rate, then according to sticky-wage theory

How does a recession affect aggregate demand?

Terms in this set (18) > Which part of real GDP fluctuate most over the course of the business cycle? investment expenditures. > Which of the following explains why productions rises in most years. ??? > Aggregate demand shifts left when the government. cuts military expenditures (when G goes down) > The aggregate quantity of goods and services ...

Which of the GDP components fluctuates the most over the course of a business cycle?

Which part of real GDP fluctuates most over the course of the business cycle? a. regular intervals. During recessions consumption spending falls relatively more than investment spending.

Which component of GDP fluctuates the most?

The amount of capital spent by businesses is the most volatile component of GDP. This may indicate that business spending is the most economically sensitive of all components.Dec 30, 2014

How GDP fluctuates around potential GDP over the course of the business cycle?

The business cycle model shows how a nation's real GDP fluctuates over time, going through phases as aggregate output increases and decreases. Over the long-run, the business cycle shows a steady increase in potential output in a growing economy.

Which of the GDP components is most volatile over the business cycles?

InvestmentInvestment is the most volatile component of GDP. Investment represents a choice to postpone consumption—it requires saving.

What causes GDP to fluctuate?

GDP fluctuates because of the business cycle. When the economy is booming, and GDP is rising, there comes a point when inflationary pressures build up rapidly as labor and productive capacity near full utilization.

What is the biggest component of GDP?

Consumption1. Consumption (C) Consumption represents the sum of goods and services purchased by citizens—such as retail items or rent—and it grows as more is consumed. It's the largest component of GDP.Jun 8, 2021

Does real GDP fluctuates around potential GDP?

Over the business cycle, real GDP fluctuates around potential GDP because the quantity of labor employed fluctuates around the full employment level. The aggregate supply-aggregate demand (AS-AD) model explains these fluctuations.

Which components of aggregate expenditure are influenced by real GDP?

Two of the components of aggregate expenditure, consumption and imports, are influenced by real GDP.

What is the relationship between real GDP and real potential GDP when the economy is at full employment?

When the economy is at full employment What is the relationship between real GDP and real potential GDP? When the economy is at full employment, real GDP equals potential GDP; so actual real GDP is determined by the same factors that determine potential GDP. 2.Dec 22, 2021

Which is the most volatile component of total spending?

Investment spendingInvestment spending is considered the most volatile component of the aggregate or total demand (it varies much more from year to year than the largest component of the aggregate demand, the consumption spending), and empirical studies by economists have revealed that the volatility of the investment component is an ...

What are the two largest components of GDP?

Four major components of GDP are: 1. Private Consumption Expenditure (C) 2. Investment Expenditure (I) 3. Government Purchases of Goods and Services (G) 4.

What are the four spending components of GDP?

The four components of GDP—investment spending, net exports, government spending, and consumption—don't move in lockstep with each other.Aug 6, 2015