Increases in Housing Prices

question 149

Multiple Choice

Increases in housing prices

• A) decrease consumption in direct proportion to the housing price increases.
• B) directly increase consumption, as this increases household wealth.
• C) have no independent effect on consumption.
• D) decrease consumption only when the overall price level decreases in the economy.

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Definitions:

Financial Statement Accounts

Accounts that appear on the financial statements, including assets, liabilities, equity, revenues, and expenses.

Lower of Cost

A principle stating that inventory must be recorded at either its historical cost or market value, whichever is lower.

Market Valuation

The process of determining the current value of a company or an asset in the marketplace.