You Notice That When Interest Rates Increases, New Residential Housing

question 144

Multiple Choice

You notice that when interest rates increases, new residential housing prices tend to decrease. This observation indicates that

• A) there must be false causality between interest rates and housing prices.
• B) higher interest rates must cause low housing prices.
• C) a scatter diagram between interest rates and housing prices will show a negative relationship.
• D) a scatter diagram between interest rates and housing prices will show a direct relationship.

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Definitions:

Production Possibilities Curve

A graphical representation that shows the maximum quantity of two goods that can be produced within a given resource constraint.

Trading Possibilities Curve

A graphical representation that shows the different quantities of two goods or services that a country can efficiently produce and trade given fixed resources.

Specialize

The process of focusing on a narrow area of expertise or production, allowing individuals or firms to increase efficiency and quality.

Domestic Price

The price of goods or services within a country's borders, as opposed to their price when exported.