Use the Following to Answer Questions

Multiple Choice

Use the following to answer questions :
Exhibit: Residential Investment
-(Exhibit: Residential Investment) Based on the graph, if the capital market is initially in equilibrium at A with the relative price of housing equal to P_H3/P and the stock of housing capital equal to K_H2, then holding other factors constant, an economic recession that reduces national income will cause the relative price of housing to move to ______ and the flow of residential housing to move to ______.

A) P_H1/P; I_H4
B) P_H2/P; I_H3
C) P_H3/P; I_H2
D) P_H4/P; I_H1