Investment spending is crucial for economic fluctuations, is sensitive to interest rates (linking it to monetary policy effects), doesn't significantly affect short-term aggregate supply, and contributes to capital stock growth, influencing long-term economic progress.

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Investment Spending

Question 20

Multiple Choice

Investment spending

A) is responsible for much of the fluctuations in GDP
B) is greatly affected by interest rates and is thus the primary link through which monetary policy affects the economy
C) has little effect on aggregate supply in the short run
D) adds to the size of the capital stock and therefore helps to determine economic progress
E) all of the above

Correct Answer: