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Of the Three Major Components of Investment in the United

Question 10

Multiple Choice

Of the three major components of investment in the United States,


A) housing is a leading indicator of future changes in GDP, whereas business investment tends to move contemporaneously with output.
B) inventory behavior is a lagging indicator of changes in GDP, whereas housing tends to move contemporaneously with output.
C) inventory behavior tends to move contemporaneously with GDP, whereas business investment and housing serve as fundamental leading indicators of future changes in output.
D) only business investment is a leading indicator of future changes in GDP.
E) only inventories are volatile over the business cycle.

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