Refer to the Following Figure When Answering the Following Questions

question 76

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 adjust investment to fluctuations in the stock market.
• B) Households base their consumption on permanent income.
• C) differences in expenditure shares
• D) Firms do not make investment decisions based on interest rates.
• E) Households are very sensitive to interest rate changes.

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