Suppose That the Equilibrium Price and Quantity of New Houses

question 249

Multiple Choice

Suppose that the equilibrium price and quantity of new houses both increase.Which of the following could be a cause of this change?

• A) Both the supply and the demand for new houses increased, and the supply increased by more than the demand.
• B) The demand for new houses increased, and the supply did not change.
• C) Both the supply and demand for new houses decreased.
• D) The supply of new houses decreased, and the demand for new houses did not change.
• E) The supply of new houses increased, and the demand for new houses did not change.

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Definitions:

Recession

A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, typically visible in real GDP, income, employment, manufacturing, and retail sales.

Excess Reserves

The amount of reserves that a bank holds beyond the minimum required by regulation or central bank policy.

Decrease Deposits

A reduction in the amount of funds deposited in banks or financial institutions, often indicating a shift in savings or investment strategies.

Excess Reserves

The reserves that banks hold over and above the legal requirement set by the central bank, available to lend or invest.