From mid-year 2006 to year-end 2008, housing prices
A) fell by approximately 30 percent, leading to a sharp reduction in aggregate demand.
B) increased by approximately 30 percent leading to a sharp increase in aggregate demand.
C) declined by a smaller about than in previous recessions.
D) were unchanged, but a sharp decline in stock prices reduced aggregate demand.

Question

Quizplus · Accepted Answer

The passage clearly states that from mid-year 2006 to year-end 2008, housing prices fell by approximately 30 percent, which would lead to a sharp reduction in aggregate demand. Therefore, option A is the correct answer. Option B is incorrect as it presents the opposite scenario, and Option D is also incorrect as it mentions that housing prices were unchanged, which contradicts the information given in the passage. Option C is partly correct, but the passage does not provide any comparison with previous recessions, making it an incomplete answer.

From Mid-Year 2006 to Year-End 2008, Housing Prices