Suppose That Consumers Begin to Believe That the Price of Housing

question 134

Multiple Choice

Suppose that consumers begin to believe that the price of housing will be lower next period. What will happen in the market for housing as a result of these expectations?

• A) Nothing will happen now. Consumers will wait for the price to actually decrease before changing their behavior.
• B) Demand for housing will increase now as people adjust to the expectation.
• C) Demand for housing will begin to fall now as people postpone their purchase until prices are lower.
• D) Investors will buy up all the housing inventory believing they are getting a "deal."

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