Purchases of new houses are the most volatile type of expenditures because they are very sensitive to ________, which is highly volatile.
A) the interest rate
B) disposable income
C) the inflation rate
D) GDP

Question

Quizplus · Accepted Answer

Purchases of new houses often involve taking out a mortgage, which means that changes in the interest rate can have a big impact on the affordability of buying a house. Interest rates are set by the Federal Reserve and can change rapidly in response to shifts in the economy. Therefore, purchases of new houses are highly sensitive to interest rate changes and are considered volatile.

Purchases of New Houses Are the Most Volatile Type of Expenditures