When GDP Growth Declines, Investment Spending Typically ______ and Consumption

question 108

Multiple Choice

When GDP growth declines, investment spending typically ______ and consumption spending typically ______.

• A) increases; increases
• B) increases; decreases
• C) decreases; decreases
• D) decreases; increases

---

Definitions:

Present Value

The current value of a future sum of money or stream of cash flows, discounted at a specific interest rate.

Compound Rate

The rate at which interest on an investment or loan is calculated on both the initial principal and the accumulated interest from previous periods.

Time Value of Money

The concept that a sum of money is worth more now than the same amount in the future due to its potential earning capacity.

Present Value

The worth today of money expected to be received in the future or sequences of cash inflows, utilizing a specific return rate.