Refer to the following figure when answering the following questions.
Figure 11.1: Growth rates of real investment and consumption (Source: U.S. Bureau of Economic Analysis)
-Consider Figure 11.1. What explains the difference in the volatility of each series?
A) Firms adjust investment to fluctuations in the stock market.
B) Households base their consumption on permanent income.
C) differences in expenditure shares
D) Firms do not make investment decisions based on interest rates.
E) Households are very sensitive to interest rate changes.

Question

Refer to the following figure when answering the following questions.
Figure 11.1: Growth rates of real investment and consumption  (Source: U.S. Bureau of Economic Analysis)
-Consider Figure 11.1. What explains the difference in the volatility of each series?
A) Firms adjust investment to fluctuations in the stock market. 
B) Households base their consumption on permanent income. 
C) differences in expenditure shares 
D) Firms do not make investment decisions based on interest rates. 
E) Households are very sensitive to interest rate changes.

Quizplus · Accepted Answer

The Answer of Refer to the following figure when answering the following questions.
Figure 11.1: Growth rates of real investment and consumption  (Source: U.S. Bureau of Economic Analysis)
-Consider Figure 11.1. What explains the difference in the volatility of each series?
A) Firms adjust investment to fluctuations in the stock market. 
B) Households base their consumption on permanent income. 
C) differences in expenditure shares 
D) Firms do not make investment decisions based on interest rates. 
E) Households are very sensitive to interest rate changes.

Refer to the Following Figure When Answering the Following Questions