Suppose the Aggregate Demand for Housing in the U

question 14

Multiple Choice

Suppose the aggregate demand for housing in the U.S. includes a substantial speculative component. What happens of the expectations of speculators change, and they believe housing prices will not increase in the future?

• A) The aggregate demand curve shifts leftward, and the equilibrium market price declines.
• B) The aggregate demand curve shifts leftward, and the equilibrium market price increases.
• C) The speculative demand curve shifts leftward, but the aggregate demand curve is unchanged.
• D) There is no change in the current demand for housing because speculators' expectations are based on future events.

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Definitions:

Pessimist

An individual who tends to see the worst aspect of things or believe that the worst will happen; a lack of hope or confidence in the future.

Thwarted Need

A desire or requirement that has been prevented from being achieved or satisfied.

Power Motive

Wanting to have an impact on others.

Power Motive

The drive to influence, control, or have an impact on others, often studied in the context of personality and social psychology.