Which of the following statements about consumption and investment is correct?
A) Consumption is more volatile than investment.
B) Investment and consumption exhibit approximately the same degree of volatility.
C) A permanent change in income will have a relatively larger effect on consumption than on investment.
D) none of the above
Question 2
An increase in the nominal interest rate, all else held constant, will always cause which of the following?
A) the real interest rate to decrease
B) the expected inflation rate to decrease
C) the demand for money to increase
D) all of the above
E) none of the above
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Which of the following statements is true of linkage?
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