Using Cross-Sectional Data from the Two Housing Assistance Supply Experiment

question 77

Multiple Choice

Using cross-sectional data from the two Housing Assistance Supply Experiment (HASE) sites-Brown County, Wisconsin, and St. Joseph County, Indiana, John Mulford of Rand Research estimates that the long-run "permanent" income elasticity of housing expenditures to be 0.45 for owners. Using this information, what is likely to happen to housing expenditures if the government increases income transfers to recipients in HASE sites?

• A) Housing expenditures will increase significantly.
• B) Housing expenditures in HASE sites significantly will fall as recipients moved out of these areas to higher-income areas.
• C) Housing expenditures will increase, but not significantly.
• D) Housing expenditures will decrease by a small amount.

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Definitions:

Clinton

A reference to Bill Clinton, the 42nd president of the United States, serving from 1993 to 2001, known for economic policies leading to budget surpluses and welfare reform.

Stimulus Package

A package of economic measures put together by a government to stimulate a struggling economy, typically including tax cuts, spending increases, and monetary policy adjustments.

High-Income Households

Families or individuals with earnings significantly above the average for a given area, often associated with higher consumption and investment capacities.

Stimulus Program

A government initiative designed to stimulate economic growth during a recession by increasing public spending or cutting taxes.