In the short run model of an aggregate economy, the investment function:
A) is considered less stable than the consumption function.
B) varies with the level of savings.
C) contains expenditures on plant and equipment but not inventory.
D) is a component of aggregate supply.

Question

Quizplus · Accepted Answer

The investment function is considered less stable than the consumption function because it is more sensitive to changes in economic conditions, such as interest rates and business expectations.

In the Short Run Model of an Aggregate Economy, the Investment