Solved

Suppose All Home Values Fall by $50,000,such That When a Person

Question 45

Multiple Choice

Suppose all home values fall by $50,000,such that when a person moves,they have to take a $50,000 loss as they had borrowed up to the full value of the house.However,assume movers still have the credit to buy a new home.How will this event affect the mobility of homeowners as compared to losing $50,000 in the stock market?


A) Mobility will be the same as either loss is a sunk cost.
B) The loss in home value will reduce the mobility of owners more because by not moving, they can avoid facing the loss in their home's value.
C) The loss in home value will increase mobility because homes elsewhere are now $50,000 cheaper.
D) The loss in home value will increase mobility only if homes are expected to appreciate more than stocks.

Correct Answer:

verifed

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions

Unlock this Answer For Free Now!

View this answer and more for free by performing one of the following actions

qr-code

Scan the QR code to install the App and get 2 free unlocks

upload documents

Unlock quizzes for free by uploading documents