If Consumers Use Their House as Collateral for Lending and the Value

question 22

Multiple Choice

If consumers use their house as collateral for lending and the value of housing in general falls, then

• A) lending is unchanged and future consumption increases.
• B) borrowing increases further to maintain current consumption.
• C) lending and aggregate consumption decrease.
• D) lenders prefer to become borrowers.
• E) lending and aggregate consumption increase.

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Definitions:

Destructive Conflict

Conflict that escalates to a point where it causes harm, disrupts relationships, and prevents resolution, often leading to long-term negative consequences.

Domination and Submission

A dynamic of power where one party controls or has authority over the other, often discussed in various contexts, including interpersonal relationships.

Escalatory Spirals

A process where actions and reactions lead to an increase in the intensity of a conflict.

Interpersonal Conflict

A disagreement or conflict between individuals that can range from minor disagreements to more significant disputes.