Part of the effect of higher interest rates on residential construction is through
A) inflationary expectations.
B) credit rationing.
C) the expected value of the homes to the buyers.
D) the income effect.

Question

Quizplus · Accepted Answer

Higher interest rates can make it more expensive for potential homebuyers to finance a new home, leading to credit rationing in which lenders restrict the availability of credit. This can impact the ability of builders to secure financing for new construction projects, and result in fewer new homes being built.

Part of the Effect of Higher Interest Rates on Residential