-Consider Figure 11.1,which shows the growth rate of real investment and the real GDP.How does the investment function describe why investment is more volatile than the real GDP?
A)Firms are unpredictable.
B)differences in expectations across firms
C)differences in expenditure shares.
D)the inclusion of interest rates in the investment function
E)none of the above

Question

-Consider Figure 11.1,which shows the growth rate of real investment and the real GDP.How does the investment function describe why investment is more volatile than the real GDP?
A)Firms are unpredictable. 
B)differences in expectations across firms 
C)differences in expenditure shares. 
D)the inclusion of interest rates in the investment function 
E)none of the above

Quizplus · Accepted Answer

The investment function includes interest rates, which can fluctuate and cause investment to be more volatile compared to real GDP. Changes in interest rates can significantly impact investment decisions, leading to greater volatility.