Refer to the Following Figure When Answering the Following Questions

question 106

Multiple Choice

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 are predictable.
• B) differences in expectations across firms
• C) differences in expenditure shares
• D) Firms do not make investment decisions based on interest rates.
• E) Households consumption-smooth.

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Definitions:

Fixed Costs

Fixed costs refer to expenses that do not change with the level of production or sales, such as rent, salaries, and insurance premiums.

Total Costs

The aggregate amount of money spent on producing goods or services, covering both stable and changeable costs.

Economic Profit

The discrepancy between a company's overall income and its combined explicit and implicit expenses.

TR

A common abbreviation for Total Revenue, the total income generated from sales of goods or services.