Use the Figure Below to Answer the Following Questions

question 113

Multiple Choice

Use the figure below to answer the following questions.

-Figure 1A.2.3 12) Refer to Figure 1A.2.3. If you were told that economic theory predicts that higher levels of the rate of interest (x) lead to lower levels of sales of houses (y) , which graph would you pick to represent this economic relationship?

• A)(a)
• B)(b)
• C)(c)
• D)(d)
• E)(a)or (d)

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Definitions:

Classical

Pertaining to the school of economic thought that emphasizes free markets, free trade, and the idea that economies self-regulate through supply and demand.

John Maynard Keynes

A British economist whose theories on the influences of macroeconomic factors on economic output and government interventions shaped modern economics.

Savings

The portion of disposable income not spent on current consumption but set aside for future use, often in a deposit account or as investments.

Investment

The action or process of allocating resources, usually money, with the expectation of generating an income or profit.