The relationship between interest rates as a percent (X) and housing starts (Y) is given by the linear equation Y' = 4094 - 269X. What happens to housing starts as interest rates fall? For what interest rate will the maximum number of housing starts be achieved?
A) Housing starts remain the same; 0%
B) Housing starts rise; 0%
C) Housing starts fall; 10%
D) Housing starts rise; 15%

Question

Quizplus · Accepted Answer

The equation Y' = 4094 - 269X shows that as X (interest rates) decreases, Y' (housing starts) increases because the relationship is negative. The maximum number of housing starts is achieved when the interest rate is at its minimum, which is 0%, as lowering the interest rate below 0% is not considered in this context.

The Relationship Between Interest Rates as a Percent (X) and Housing