Some economists argue that there were good reasons for housing price to rise. Explain their argument
What will be an ideal response?
First, the real interest rate was decreasing, increasing the present value of rents. Second, the nominal interest rate was also decreasing, and this mattered because nominal interest payments are tax deductible. Third, the mortgage market was changing: More people was able to borrow and buy a house; people who borrowed were able to borrow a larger proportion of the value of the house. Both of these factors led to an increase in demand, and thus an increase in house prices.
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Write an essay on the role of Congress in U.S. trade policy since 1930
What will be an ideal response?
Only in the case of perfectly inelastic demand will consumers pay the full amount of a specific tax or ad valorem tax
Indicate whether the statement is true or false
For a perfectly competitive firm operating at the profit-maximizing output level in the short run,
a. MR = TR b. MC = price c. MC = ATC d. MC = AVC e. AFC = price
Given that frozen yogurt and ice cream are substitutes, a shift in preferences in favor of yogurt would be predicted to do all of the following EXCEPT
A) raise the equilibrium price of frozen yogurt. B) increase the quantity supplied of frozen yogurt. C) increase the supply of ice cream. D) increase the demand for frozen yogurt.