If mortgages and houses are complements in consumption and interest rates decrease,we would expect to see
A)An increase in demand for houses
B)An decrease in demand for houses
C)An increase in the quantity of houses demanded
D)An decrease in the quantity of houses demanded

Question

​If mortgages and houses are complements in consumption and interest rates decrease,we would expect to see
A)​An increase in demand for houses
B)An decrease in demand for houses
C)An increase in the quantity of houses demanded
D)​An decrease in the quantity of houses demanded

Quizplus · Accepted Answer

When interest rates decrease, it becomes cheaper to obtain a mortgage. As mortgages and houses are complements in consumption, a decrease in the cost of obtaining a mortgage would lead to an increase in demand for houses, as people will be more likely to purchase a new house or upgrade their existing property. This means that choice A (an increase in demand for houses) is the correct answer.

​If Mortgages and Houses Are Complements in Consumption and Interest

If Mortgages and Houses Are Complements in Consumption and Interest