Fixed investment in the United States
A) moves up and down with GDP but is less volatile than any measure of total output.
B) moves countercyclically with GDP in a pattern far more volatile than the other components of aggregate demand.
C) moves up and down with GDP but is more volatile than the other components of GDP.
D) appears to be independent of the level of GDP but is sufficiently volatile to explain more than 50 percent of the short-run variation in aggregate demand.
E) moves up and down with GDP but is the least volatile component of aggregate demand.

Question

Quizplus · Accepted Answer

Fixed investment in the United States is indeed correlated with GDP, moving up and down as the economy grows or contracts. However, it is more volatile than other components of GDP, such as consumer spending or government expenditures, making it a significant factor in the overall volatility of the economy.

Fixed Investment in the United States