When people became less concerned with the underlying value of their houses and instead focused on the expectations of the prices of their houses increasing,________ occurred.
A)stagflation
B)an automatic destabilizer
C)a housing bubble
D)a supply shock

Question

Quizplus · Accepted Answer

When people focus on the expectations of the prices of their houses increasing, it can lead to a housing bubble. This means that the prices of houses become artificially inflated and not in line with their underlying value. When the bubble eventually bursts, it can lead to significant economic consequences. Stagflation refers to a situation of high inflation and stagnant economic growth, which is not directly related to a housing bubble. An automatic destabilizer typically refers to a feature in the economy that helps to stabilize it during times of economic stress, so this is not the best choice. A supply shock refers to a sudden, unexpected change in the supply of goods or services, which can lead to changes in prices, but this is not directly related to the scenario described in the question.

When People Became Less Concerned with the Underlying Value of Their