Indicate whether you agree or disagree with the following statement: \"In years

Question

Indicate whether you agree or disagree with the following statement:

"In years when people buy many shares of stock, investment will be high and, therefore, so will gross domestic product (GDP)."

A. Disagree: Investment as a component of GDP refers to teh purchase of physical and human capital and inventory, not stock purchases.

B. Agree: GDP= C+I+G+NX. Therefore, as "I" (Investment) increases, GDP increases.

C. Disagree: While GDP will be high in this case, it is the result of an increase in consumer expenditure on stocks, not investment spending

D. Agree: When investment is high, people must have mroe money to spend. Therefore, GDP increases.

Explanation / Answer

Hi,

Option A (Disagree: Investment as a component of GDP refers to teh purchase of physical and human capital and inventory, not stock purchases) is the correct answer.

Thanks.

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