Refer to the Following Table When Answering
Table 11

question 13

Multiple Choice

Refer to the following table when answering
Table 11.1: Real Growth Rates: 1950-2012
$$\begin{array} { l c c } \hline & \text { Mean } & \text { St Dev } \\\hline \text { Output } & 3.26 & 2.71 \\\text { Household Consumption } & 3.37 & 2.15 \\\text { Firm Investment } & 4.60 & 12.72 \\\text { Government Expenditures } & 2.76 & 6.15 \\\hline\end{array}$$
-You are given the data in Table 11.1, which covers the period 1950-2012. "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 base their consumption on permanent income
• B) households do not consumption-smooth
• C) firms rely solely on "animal spirits" when considering new investment
• D) government expenditures are always greater than household expenditures
• E) households base their consumption patterns on interest rates only

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