Consumption of durables is more variable relative to trend than consumption of semi-durables, and consumption of semi-durables is more variable relative to trend than con-sumption of nondurables and services. Speculate on why we observe these phenomena, and relate this to the key business cycle facts in Tables 3.1 and 3.2.

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Table 3.1 Correlation Coefficients and Variability of Percentage Deviations from Trend Correlation Standard Deviation Coefficient (% of S.D. of GDP) Consumption 0.78 76.6 Investment 0.85 489.9 Price Level -0.19 56.3 Money Supply Employment Average Labor Productivity 0.20 81.0 0.80 63.0 0.80 62.4 Table 3.2 Summary of Business Cycle Facts Variation Cyclicality Lead/Lag Relative to GDP Consumption Coincident Smaller Procyclical Procyclical Countercyclical Coincident Procyclical Procyclical Procyclical Procyclical Investment Coincident Larger Price Level Smaller Money Supply Employment Real Wage Leading Lagging Smaller Smaller ? Average Labor Productivity Coincident Smaller