Question

Think about the different components of GDP and how they change with the business cycle. Which component of consumption fluctuates the most

Answer 1

durable goods

Step-by-step explanation:

The three components of consumption are

• durable goods, e.g. cars, refrigerators, furniture, etc.
• non-durable goods, e.g. food, fuel, clothing, etc.
• services, e.g. utilities, phone bills, insurance, etc.

Durable goods vary the most due to economic fluctuations, e.g. during recessions, many households will try to sell their used cars, while sales of new cars plummet.