From the Residential Arbitrage Equation, a Rise in the Down

question 4

Multiple Choice

From the residential arbitrage equation, a rise in the down payment will ________ the price of the house, while an increase in the real interest rate will ________ the house price.

• A) reduce; raise
• B) raise; reduce
• C) reduce; reduce
• D) raise; have no effect on
• E) raise; raise

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