Declines in Spending on Residential Construction Are Often Due to Increases

question 19

Multiple Choice

Declines in spending on residential construction are often due to increases in interest rates.The collapse in residential construction prior to and during the recession of 2007-2009 was due more to ________ than to higher interest rates.

• A)the financial crisis that began in 2007
• B)the rapid inflation of the early 2000s
• C)increases in the price of lumber
• D)rising wages in the construction industry

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Definitions:

Hybrid Cars

Vehicles powered by a combination of an internal combustion engine and one or more electric motors, using less fuel than conventional cars.

Normal Good

A type of good for which demand increases as the income of the consumer increases, showing a direct relationship between income and demand.

Income Elasticity

A measure of how much the demand for a good responds to a change in consumers' income.

Total Revenue

The total income generated by a firm from the sale of goods or services before any costs or expenses are subtracted.