Consider the figure below,which shows the Nevada housing price index from 1990-2010.As can be seen,real estate price began to bubble in about 2005.Use the house price arbitrage equation to explain how each of the following may have contributed to this bubble:
a.interest rates,in particular mortgage rates,fell between 2000 and 2005;
b.increasingly lax lending practices,with lower downpayments,for home mortgages;
c.As home prices in Nevada increased,there became an incentive to invest in residential real estate.

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The Answer of Consider the figure below,which shows the Nevada housing price index from 1990-2010.As can be seen,real estate price began to bubble in about 2005.Use the house price arbitrage equation to explain how each of the following may have contributed to this bubble:
a.interest rates,in particular mortgage rates,fell between 2000 and 2005;
b.increasingly lax lending practices,with lower downpayments,for home mortgages;
c.As home prices in Nevada increased,there became an incentive to invest in residential real estate.

Consider the Figure Below,which Shows the Nevada Housing Price Index