A rise in the real interest rate, everything else remaining unchanged, will cause household investment in housing to
A)decline.
B)not change.
C)rise.
D)rise at first, then decline later.

Question

Quizplus · Accepted Answer

A rise in the real interest rate would increase the cost of borrowing, making it more expensive for households to finance their investment in housing. This would likely lead to a decline in household investment in housing as it becomes less attractive and more costly.

A Rise in the Real Interest Rate, Everything Else Remaining