The most volatile component of aggregate demand is spending by
A) R.O.W.
B) businesses.
C) consumers.
D) governments.
E) economists.

Question

Quizplus · Accepted Answer

Business investment spending is considered the most volatile component of aggregate demand because it is highly sensitive to interest rates and future economic expectations. Businesses adjust their investment spending more frequently and significantly in response to economic changes compared to consumers, governments, or the rest of the world (R.O.W.), making it the most volatile.

The Most Volatile Component of Aggregate Demand Is Spending by