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Why does investment vary more than consumption from year to year
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37 votes
37 votes
Why does investment vary more than consumption from year to year

User Kara Potts
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1 Answer

27 votes
27 votes

Answer:

Investment is the most volatile variable followed by consumption

Step-by-step explanation:

In fact, investment is a much smaller proportion of output than consumption, but because individuals try and smooth out their consumption levels over time, current investment reacts much more dramatically to changes in economic conditions than current consumption does.

User Dru Freeman
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