Historical evidence for the US economy indicated that: D. Changes in GDP over the business cycle is the biggest cause of changes in investment over the business cycle.
Business investment is a long-lasting asset used by private businesses to produce goods and services. Conversely, the investors buy the company’s stocks to make more money. Business investment affects the US economy’s growth both in the short-term and long term. It can increase GDP as it fluctuates significantly from quarter to quarter. In the late 1970s, business investment as a gross domestic product (GDP) increased and remains elevated until this day. Despite the effect of Covid-19, US business investment as GDP percentage remained at 13.4% in October 2020.
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