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Question
Macroeconomics
Posted 5 months ago
When using the expenditures approach, which category of gross domestic product (GDP) changes when domestic firms anticipate that a recession will occur soon?
Choose 1 answer:
(A) Consumption
(B) Wages
(C) Investment
(D) Government spending
(E) Net exports
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Answer from Sia
Posted 5 months ago
C
Key Concept
Investment
Explanation
When domestic firms anticipate a recession, they often reduce investment spending due to expectations of lower future demand, which directly affects the investment component of GDP in the expenditures approach.
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