From the residential arbitrage equation, a rise in the rent will ________ the price of the house, while an increase in the depreciation rate will ________ the house price.
A) raise; reduce
B) reduce; raise
C) have no effect on; raise
D) raise; raise
E) reduce; have no effect on

Question

Quizplus · Accepted Answer

The residential arbitrage equation suggests that an increase in rent, which represents a return on the investment, will increase the house's price. Conversely, a higher depreciation rate, indicating a faster loss in the house's value, will reduce the house's price.

From the Residential Arbitrage Equation, a Rise in the Rent