We are given that the average amount spent on textbooks by all incoming freshmen was $400 () with a standard deviation of $25 (). The sampling distribution of the sample mean for randomly selected samples of 100 freshmen has a standard deviation of $2.50. Which of the following is the correct interpretation of the population standard deviation compared to the sampling distribution's standard deviation?

The population standard deviation of $25 gives the variation in the average amount spent amongst all samples of 100 freshmen. The sampling distribution's standard deviation of $2.50 gives the variation in amount spent amongst all freshmen.

The population standard deviation of $25 gives the variation in amount spent amongst all freshmen. The sampling distribution's standard deviation of $2.50 gives the variation in the average amount spent amongst all samples of 100 freshmen.