Investment, a key component of aggregate demand, can cause recessions and booms based on fluctuations in its levels.

Question

Quizplus · Accepted Answer

Investment is a key component of aggregate demand and can cause fluctuations in the economy. When investment levels are high, it can lead to booms and when they are low, it can lead to recessions. The level of investment is affected by various factors such as interest rates, expected returns, and government policies.

Investment, a Key Component of Aggregate Demand, Can Cause Recessions