Analogous to the role of expected profits from owning installed capital in the q theory of business fixed investment is the role played by the _____ in the model of the housing market.
A) real interest rate
B) nominal interest rate
C) expected imputed rent from owning housing
D) stock of existing housing

Question

Quizplus · Accepted Answer

In the model of the housing market, the expected imputed rent from owning housing plays a similar role to expected profits from owning installed capital in the q theory of business fixed investment. It represents the expected future stream of benefits from owning a particular asset, which affects the decision to invest in it. The other options, such as real and nominal interest rates and stock of existing housing, can also affect the housing market, but they do not play the same analogous role as expected imputed rent in this model.

Analogous to the Role of Expected Profits from Owning Installed