Fluctuations in Investment

question 10

Multiple Choice

Fluctuations in investment:

• A)account for almost all of the variability in gross domestic product (GDP)only during expansions.
• B)account for little of the variability in gross domestic product (GDP).
• C)account for almost all of the variability in gross domestic product (GDP)only during recessions.
• D)are larger during expansions than during recessions.
• E)account for more of the variability in gross domestic product (GDP)than consumption.

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Definitions:

Market Interest Rate

The prevailing rate at which borrowers can obtain money from lenders, influenced by supply and demand in the money market.

Store of Value

An asset that can be saved, retrieved, and exchanged at a later time, and is predictably useful when retrieved.

Liquidated

The process of converting assets into cash or other forms of payment, often used in bankruptcy proceedings.

Interest Income

Earnings received from deposit accounts or investments such as bonds, loans where one lends money to someone else in exchange for a return of interest.