Refer to the following table when answering the following questions.
Table 11.1: Real Growth Rates: 1970-2015
-You are given the data in Table 11.1, which covers the period 1970-2015. "Mean" is the average growth over the period and "St Dev" is the standard deviation of the growth (a measure of volatility) of real output, consumption, investment, and government expenditures. From this information, you conclude that:
A) households smooth their consumption more than other sectors.
B) firms do not base their decisions on more than the potential GDP.
C) foreigners are fickle consumers.
D) government expenditures are zero.
E) government expenditures are constant.

Question

Refer to the following table when answering the following questions.
Table 11.1: Real Growth Rates: 1970-2015 
-You are given the data in Table 11.1, which covers the period 1970-2015. "Mean" is the average growth over the period and "St Dev" is the standard deviation of the growth (a measure of volatility) of real output, consumption, investment, and government expenditures. From this information, you conclude that:
A) households smooth their consumption more than other sectors. 
B) firms do not base their decisions on more than the potential GDP. 
C) foreigners are fickle consumers. 
D) government expenditures are zero. 
E) government expenditures are constant.

Quizplus · Accepted Answer

The lower standard deviation of consumption growth compared to the other sectors indicates that households tend to smooth their consumption, rather than react strongly to changes in income.

Refer to the Following Table When Answering the Following Questions