The graph below suggests a housing price ________ followed by a(n) ________ in aggregate demand.

Question

Quizplus · Accepted Answer

The graph shows a steep increase in housing prices followed by a sudden decrease. This pattern is consistent with a housing bubble, where demand for housing increases rapidly due to factors such as low interest rates or relaxed lending practices. As more people buy homes, the prices increase, and people begin to speculate in the market. Eventually, the demand cannot sustain the inflated prices, and the bubble bursts, causing a decrease in demand and a decrease in prices. Therefore, the best answer is C, bubble; decrease.

The Graph Below Suggests a Housing Price ________ Followed by A(n)