The Housing Crisis Has Some Roots in Inflation Because

question 36

Multiple Choice

The housing crisis has some roots in inflation because:

• A) new houses were new goods and services and the consumer price index (CPI) didn't measure them.
• B) builders confused inflation with an increase in demand and hence overbuilt-a price confusion problem.
• C) there were menu costs associated with higher housing prices.
• D) money illusion occurred when builders thought that real prices were rising.
• E) money illusion occurred when housing buyers thought real wages were rising.

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