If Housing Prices Are Rising by 20 Percent Per Year

question 26

Multiple Choice

If housing prices are rising by 20 percent per year, you can borrow money at 5 percent per year, and you are sure housing prices will continue to rise in the future, you would be wise to:

• A)not buy a house because it will leave you in debt.
• B)buy as many houses as you can.
• C)buy a house if you need a house.
• D)sell your house to get out of debt.

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Definitions:

Variable Cost

Costs that change in proportion to the level of goods or services that a business produces.

Fixed Cost

Expenses that do not change in total regardless of the level of output or activity in a business, such as rent, salaries, and loan payments.

Dynamic Pricing

A pricing tactic that involves constantly updating prices to reflect changes in supply, demand, or market conditions.

Shrinkflation

The process of items shrinking in size or quantity while their prices remain the same or increase.