When Housing Prices Fall, as They Do After a Housing

question 167

Multiple Choice

When housing prices fall, as they do after a housing market bubble, consumption spending on furniture, appliances, and home improvements ________ as many households found it ________ to borrow against the value of their homes.

• A)declined; easier
• B)declined; harder
• C)increased; easier
• D)increased; harder

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Definitions:

Increases and Decreases

Terms referring to the changes in financial statement amounts from one period to another, affecting assets, liabilities, revenues, and expenses.

Types of Accounts

Categories into which financial transactions are grouped in accounting, such as assets, liabilities, equity, revenue, and expenses.

Debit or Credit

Debit or credit are terms used in accounting to indicate whether an entry increases or decreases an account balance, impacting the balance sheet and income statement differently.

Normal Balance

The side (debit or credit) of an account that is typically increased. For asset accounts, it is a debit balance; for liability and equity accounts, it is a credit balance.