What Impact Did the Change in Housing Prices During 2002

question 31

Multiple Choice

What impact did the change in housing prices during 2002 to 2005 have within the framework of the AD/AS model?

• A) Declining housing prices reduced aggregate demand shifting AD leftward.
• B) Rising housing prices increased aggregate demand shifting AD rightward.
• C) Rising housing prices led to increased construction shifting LRAS leftward.
• D) Declining housing prices caused SRAS to shift leftward.

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Definitions:

Form 1040

The customary Internal Revenue Service (IRS) document utilized by individuals for the purpose of filing their annual earnings tax returns.

Tax Rate Structure

The dividing of taxable income into sections (brackets), each of which is taxed at a different rate.

Progressive

A term used to describe a tax system where the tax rate increases as the taxable income increases.

Proportional

A concept where elements are in a constant relationship in terms of size, amount, or number relative to a whole.