Declines in housing prices in the United States in the late 2000s ________.
A) led to consumers having lower mortgages and hence higher disposable incomes
B) decreased the wealth of consumers, leading to decreased consumption spending
C) increased the wealth of investors, leading to higher investment spending
D) led to banks having higher net worth, and hence being more willing to lend

Question

Quizplus · Accepted Answer

Declines in housing prices in the United States in the late 2000s decreased the wealth of consumers as a significant portion of their net worth was tied up in home equity. This led to decreased consumption spending as consumers felt less wealthy and had less disposable income.

Declines in Housing Prices in the United States in the Late