How do consumption and investment tend to move during the business cycle?
A) Consumption and investment both tend to rise or fall together
B) Consumption tends to rise when investment falls, and vice versa
C) Consumption always rises, even while investment rises and falls with the business cycle
D) Investment always rises, even while consumption rises and falls with the business cycle

Question

Quizplus · Accepted Answer

Consumption and investment tend to move together during the business cycle. During periods of economic growth, both consumption and investment increase as businesses and consumers became more confident about their prospects. During a recession or slowdown, both consumption and investment decrease as people become more cautious with their spending and investment decisions.

How Do Consumption and Investment Tend to Move During the Business