Holding Other Factors Constant, a Decline in the Real Interest

question 61

Multiple Choice

Holding other factors constant, a decline in the real interest rate will ______ the price of housing and ______ the flow of residential housing investment.

• A) increase; increase
• B) increase; decrease
• C) decrease; increase
• D) decrease; decrease

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Definitions:

Increasing Rate

Describes a situation where a quantity or metric, such as inflation, interest rates, or population, is growing over time.

Variable Cost

A cost that changes in proportion to the level of output or activity.

Fixed Cost

Fixed charges that stay the same no matter the production or sales volume, like rental costs, salary payments, and insurance rates.

Composition

The way in which different components or elements are organized or arranged.