Inverse Relation

Explanation

What is Inverse Relation?

When two variables are interrelated but at the same, if the change of one causes the opposite change to the other then it is identified as inverse relation. In regression analysis, this is also known as a negative correlation. It means that if there is an increase in one variable, then the other vehicle decreases and vice versa. If we take the situation of the relationship between consumer spending and interest rates, then this can serve to be the best example. When interest rates increase, consumers are less willing to spend and more willing to save.  There is also a decrease in consumer spending with the increase in unemployment because of the reason for the less disposable income of the people.

Let’s have a look at an example.

There are many real-life examples of inverse relationships. The speed of travel relative to travel time (the faster one travels from point to point B, the less travel time is required to arrive at point B from point A); savings and disposable income (the less the disposable income, the more the savings); government spending and unemployment rate (the higher the government spending, the lower the unemployment rate) and so on. So, it provides real-life examples in the case of inverse relationships.

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