The model of supply and demand leads to the prediction that low interest rates cause:
A) an increase in housing prices, especially in cities with plenty of room for expansion.
B) an increase in housing prices, especially in cities with limited land.
C) a decrease in housing prices, especially in cities with plenty of room for expansion.
D) a decrease in housing prices, especially in cities with limited land.

Question

Quizplus · Accepted Answer

Low interest rates make borrowing cheaper, increasing demand for housing. In cities with limited land, this increased demand leads to higher prices due to the scarcity of available land for new construction.

The Model of Supply and Demand Leads to the Prediction