Which of the Following Statements About Consumption and Investment Is

question 39

Multiple Choice

Which of the following statements about consumption and investment is correct?

• A) A temporary change in income will have a relatively larger effect on consumption than on investment.
• B) A permanent change in income will have a relatively larger effect on consumption than on investment.
• C) Consumption is more volatile than investment.
• D) Investment and consumption exhibit approximately the same degree of volatility.
• E) Investment is more volatile than consumption.

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Definitions:

Partnerships

A form of business organization in which two or more individuals share ownership, responsibilities, and the profits or losses of the enterprise.

Corporations

Legal entities that are separate from their owners, providing limited liability protection, and have the ability to raise capital by issuing shares.

19th Century

The period from January 1, 1801, to December 31, 1900, marking the nineteenth century of the Gregorian calendar.

Gross Investment

The sum of money used to acquire new capital assets, not considering depreciation expenses.