4. Using quarterly data from 1947 to the present, graph residential fixed investment relative to GDP.

a. Compare the graph of residential fixed investment relative to GDP to a graph of the civilian unemployment rate. What happens to residential investment during recessions? In this respect, is residential investment similar to or different from other types of investment?

b. During the two decades after World War II, there was an upsurge in population growth and household formation known as the “baby boom.” The baby boom was followed by a “baby bust” during which population growth slowed.

How are these demographic trends connected to the behavior of residential investment relative to GDP shown in your graph?