When Home Prices Are Falling, We Would Expect A(n) ________

question 20

Multiple Choice

When home prices are falling, we would expect a(n) ________.

• A) high mortgage default rates
• B) low mortgage default rates
• C) unchanged mortgage default rates
• D) higher percentage of owner home equity

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Definitions:

Price Elasticity

An indicator of the sensitivity of the demand for a product to fluctuations in its price, represented by the percentage change.

Quantity Demanded

The specific amount of a product that buyers are willing to purchase at a given price, holding all other factors constant.

Absolute Value

A mathematical function that describes the distance of a number on the number line from zero, disregarding its direction; always a non-negative value.

Midpoint Method

A technique used in economics to calculate the elasticity of demand or supply, minimizing the bias in calculation by taking the average of the initial and final quantities and prices.