Which of the following is the primary explanation for most of the fluctuations in output and employment over the course of the business cycle?
A)changes in net exports
B)changes in the marginal propensity to consume
C)abrupt changes in stock market prices
D)changes in investment expenditures

Question

Quizplus · Accepted Answer

Changes in investment expenditures are the primary driver of fluctuations in output and employment over the business cycle. When businesses are optimistic about the future, they invest in new equipment, buildings, and technology, which leads to an increase in output and employment. Conversely, when businesses are pessimistic, they cut back on investment, leading to a decrease in output and employment.

Which of the Following Is the Primary Explanation for Most