Refer to the Following Figure When Answering the Following Questions

Multiple Choice

Refer to the following figure when answering the following questions.
Figure 11.1: Growth rates of real investment and consumption (Source: U.S. Bureau of Economic Analysis)
-Consider Figure 11.1. What explains the difference in the volatility of each series?

A) Firms are predictable.
B) differences in expectations across firms
C) differences in expenditure shares
D) Firms do not make investment decisions based on interest rates.
E) Households consumption-smooth.