Question

The investment component of GDP measures spending on__________
(a) financial assets such as stocks and bonds. During recessions it declines by a relatively large amount.
(b) residential construction, business equipment, business structures, and changes in inventory. During recessions it declines by a relatively large amount.
(c) financial assets such as stocks and bonds. During recessions it declines by a relatively small amount.
(d) residential construction, business equipment, business structures, and changes in inventory. During recessions it declines by a relatively small amount.

Answer 1

Answer:

correct option is (b)  residential construction, business equipment, business structures, and changes in inventory. During recessions it declines by a relatively large amount

Explanation:

we know that investment component of GDP measures spending on the residential construction and  business equipment and business structures and change in inventory

During recessions it decline by relatively large amount

because slow down there is no sale of good

and goods are not selling to expectations of firm

therefor  firms revise their investment accordingly and Further firms do face losses in the recession

so correct option is (b)