In annual percentage terms, investment spending in the United States is
A) less variable than real GDP.
B) less variable than consumption spending.
C) less variable than the price level.
D) more variable than real GDP.

Question

Quizplus · Accepted Answer

Investment spending is considered more variable than real GDP because investment decisions are often based on uncertain expectations about future economic conditions and profitability. Real GDP, on the other hand, is influenced by a variety of factors, including consumption and government spending, which tend to be more stable in the short run. Similarly, consumption spending is typically more stable than investment spending as it is largely driven by household income and long-term expectations, which are relatively more predictable. The price level, while important for investment decisions, is also influenced by a variety of economic factors and tends to be less variable than investment spending.

In Annual Percentage Terms, Investment Spending in the United States