If your grandparents buy a newly built retirement home, this transaction would affect ?
Correct answer: A. investment
- A. investment
- B. net exports
- C. government purchases
- D. consumption
- E. none of these answers
Explanation
A newly built home is a newly produced capital asset, so its purchase is recorded as residential investment. Buying an existing home would mainly transfer ownership and would not represent current production.
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The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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