In the above figure, if the interest rate is negatively related to household expenditures for any given level of household income, an increase in the interest rate will
A) shift the line vertically downward.
B) shift the line vertically upward.
C) cause no change in the line's position.
D) make the line negatively sloped.

Question

Quizplus · Accepted Answer

An increase in the interest rate reduces household expenditures, shifting the line vertically downward.

In the Above Figure, If the Interest Rate Is Negatively