Inventory investment displays business cycle patterns that differ from other forms of expenditure because

inventory investment is countercyclical, but expenditures are generally procyclical.

inventory investment is procyclical, but expenditures are generally coincident with the business cycle.

inventory investment displays large fluctuations that are not associated with business cycle peaks and troughs.

inventory investment lags the business cycle, but expenditures generally lead the business cycle.

Expert Solution

Option 3

Inventory investment is related to production and sales in the economy and it fluctuates more and it also changes GDP sometimes as it is the most influential factor of GDP but it does not go with the business cycles or opposite to business cycles.

Rahul Sunny answered 2 years ago

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