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.

Question

Quizplus · Accepted Answer

Builders confused the inflation with an increase in demand and hence overbuilt, which led to an excess supply of houses and eventually a housing crisis.

The Housing Crisis Has Some Roots in Inflation Because