Refer to the following figure when answering
Figure 11.2: Growth Rates of Investment and GDP (Source: U.S. Bureau of Economic Analysis)
-Consider Figure 11.2. How does the investment function describe why investment is more volatile than the real GDP?
A) unpredictable firms
B) differences in expectations across firms
C) differences in expenditure shares
D) the inclusion of interest rates in the investment function
E) changes in business taxes

Question

Refer to the following figure when answering  
Figure 11.2: Growth Rates of Investment and GDP  (Source: U.S. Bureau of Economic Analysis)
-Consider Figure 11.2. How does the investment function describe why investment is more volatile than the real GDP?
A) unpredictable firms 
B) differences in expectations across firms 
C) differences in expenditure shares 
D) the inclusion of interest rates in the investment function 
E) changes in business taxes

Quizplus · Accepted Answer

The investment function includes interest rates, which can vary greatly and have a significant impact on firms' decisions to invest. This variability can contribute to the greater volatility of investment compared to real GDP.

Refer to the Following Figure When Answering