Final answer:
A falling interest rate typically leads to an increased demand for consumer durables because it lowers borrowing costs, encouraging significant purchases. Therefore, among the provided options, the AD curve shifts to the right for durables as the main answer.
Step-by-step explanation:
The question is asking how a falling interest rate affects the aggregate demand (AD) curve for consumer durables and non-durables. A fall in interest rates usually makes borrowing cheaper, which can stimulate demand for both consumer durables and non-durables. This is because consumers are more likely to finance significant purchases, like durables, when interest rates are low. However, low interest rates can also increase disposable income by reducing the cost of existing debt, which in turn can increase demand for non-durables, such as food and clothing.Now, a tax increase on consumer income tends to reduce consumption, pushing the AD curve to the left, which can be a solution to inflation. But the effect of falling interest rates is different. Among the options provided, the right shift of the AD curve due to falling interest rates would apply to both durables and non-durables. However, the question asks for a specific focus, and in the context of falling interest rates, demand for durables is more noticeably affected due to their often higher purchase prices and financing options, thereby leading to the conclusion that the right durables is the correct option (Option C).