Refer to the Following Figure When Answering

question 1

Multiple Choice

Refer to the following figure when answering
Figure 11.2: Growth Rates of Investment and GDP (Source: U.S. Bureau of Economic Analysis)
-Consider Figure 11.2. How does the investment function describe why investment is more volatile than the real GDP?

• A) Firms are unpredictable.
• B) Investment does not include household residential expenditures.
• C) Inventories do not adjust to changes in business cycles.
• D) Firms do not have very good information.
• E) The marginal product of capital is included in the investment function.

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Definitions:

Positive Net Income

A financial situation where revenues exceed expenses, resulting in a net profit.

Not Taxed

A classification for income or transactions that are exempt from taxation.

Distributions

In financial contexts, distributions refer to payments made by a fund, account, or security to its shareholders or unit holders, which could include interest payments, dividends, or returns of capital.

Annuity

A financial product that pays out a fixed stream of payments to an individual, typically used as part of a retirement strategy.