Question 3: Private investment

Search the FRED database for the "investment share of GDP" and one of the first links to appear is for "gross private domestic investment."

a. Display a graph of this series from 1990-1-1 to 2021-10-1.

b. How does its average value compare to the ratio of capital income to output learnt in class, rK/Y = 1/3 ?

c. There should be a significant drop-off in the graph of question (a). Explain the potential reasons of the significant drop-off observed in a few sentences.

d. The drop-off during pandemic is not as significant as what happened in other recession periods. Explain your understanding briefly.