Suppose Housing Values Fall During a Recession

question 136

Multiple Choice

Suppose housing values fall during a recession. In the short run,

• A) the price level will fall as we move down the aggregate demand curve.
• B) the price level will fall as we move down the short-run aggregate supply curve.
• C) short-run aggregate supply will decrease and the price level will fall.
• D) short-run aggregate supply will increase because wages will fall.
• E) aggregate demand will increase because the demand for houses will increase.

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Definitions:

Education

The process of receiving or giving systematic instruction, especially at a school or university.

Productivity

The measure of how efficiently production inputs, like labor and capital, are being used to produce a given level of output.

Compensating Differential

Additional wages or benefits offered to employees to offset unpleasant aspects of a job or workplace conditions.

Nonmonetary Characteristics

Features or attributes of goods, services, or job positions that do not have a direct monetary value or financial aspect.