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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Definitions:

Albert Bandura

A Canadian-American psychologist known for his work on social learning theory and the concept of self-efficacy.

Reinforcement

A principle in behaviorism that strengthens a behavior by providing a consequence an individual finds rewarding.

Disinhibition

The reduction of inhibition leading to an increase in spontaneous behavior, often resulting from reduced social or psychological restraint.

Aggressive Behavior

Behavior aimed at causing harm or pain to another being, motivated by hostility, anger, or a desire to dominate.