On a graph showing investment along the vertical axis and income along the horizontal axis,
A)the investment line slopes downward
B)the investment line would shift upward if income increased
C)the investment line would shift downward if the interest rate increased
D)investment is the independent variable and income is the dependent variable
E)the investment line would shift downward if income increased

Question

Quizplus · Accepted Answer

The investment line would shift downward if the interest rate increased because higher interest rates typically discourage investment by increasing the cost of borrowing.

On a Graph Showing Investment Along the Vertical Axis and Income