One reason for the volatility of investment is that
A) investment decisions can be postponed because of the durability of capital goods.
B) motives for saving and investment are the same for businesses and households.
C) firms maintain a constant rate of capacity utilization from year to year.
D) wages and prices are flexible.
E) consumer spending is erratic and unpredictable.

Question

Quizplus · Accepted Answer

Investment decisions can indeed be postponed due to the durability of capital goods. This means that if the economic outlook is uncertain, firms might delay investing in new capital until they have a clearer picture, contributing to investment volatility.

One Reason for the Volatility of Investment Is That