What impact did the change in housing prices during 2002 to 2005 have within the framework of the AD/AS model?
A) Declining housing prices reduced aggregate demand shifting AD leftward.
B) Rising housing prices increased aggregate demand shifting AD rightward.
C) Rising housing prices led to increased construction shifting LRAS leftward.
D) Declining housing prices caused SRAS to shift leftward.

Question

Quizplus · Accepted Answer

Rising housing prices increased wealth and consumer confidence, leading to an increase in consumption and investment, shifting AD rightward.

What Impact Did the Change in Housing Prices During 2002