Question

Changes in consumption spending play a large role in the business cycle because​ _______ accounts for approximately​ ______ percent of GDP.

A.U.S. consumer purchases of net​ exports; 70
B.U.S. consumer purchases of net​ exports; 50
C.consumption​ expenditure; 90
D.consumption​ expenditure; 70

Answer 1

Consumption expenditure accounts for about 70 percent of GDP and is the largest component of GDP, significantly influencing the business cycle.

Step-by-step explanation:

Changes in consumption spending play a large role in the business cycle because consumption expenditure accounts for approximately 70 percent of GDP. Out of the given options, the most accurate is (D) since consumption by households, which includes spending on goods and services, is the largest and most stable component of Gross Domestic Product (GDP). Consumer spending dictates a significant portion of the economic activity and has been on a slight upward trend over time, indicating its importance in driving the economy.