Assume mortgages and houses are complements in consumption;if the price of mortgages decreases (decreases in interest rates),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

Quizplus · Accepted Answer

Mortgages and houses are complementary goods, which means that a decrease in the price of mortgages (i.e., lower interest rates) leads to an increase in the demand for houses. This is because lower interest rates make it more affordable for consumers to borrow money to buy a house, which increases the quantity of houses demanded. Therefore, the best choice is A.

Assume Mortgages and Houses Are Complements in Consumption;if the Price