The Model of Supply and Demand Leads to the Prediction

question 3

Multiple Choice

The model of supply and demand leads to the prediction that high interest rates cause:

• A) an increase in the price of housing and a decrease in the number of homes purchased.
• B) a decrease in the price of housing and an increase in the number of homes purchased.
• C) an increase in both housing prices and the number of homes purchased.
• D) a decrease in both housing prices and the number of homes purchased.

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Definitions:

Lumbar

Pertaining to the lower part of the back or the five vertebrae in the lower spine.

Cervical

Pertaining to the neck or cervix in the human body.

Atlas

The first cervical vertebra of the spine, supporting the skull and enabling head movements.

Axis

The second cervical vertebra (C2) of the spine, which allows the head to rotate.