A sudden fall in housing prices in Potentia has lowered the confidence of households.Assuming all else equal,this is likely to lead to a(n)________.
A) increase in the overall price level
B) increase in the demand for construction workers
C) decline in current consumption
D) fall in the unemployment rate

Question

Quizplus · Accepted Answer

A sudden fall in housing prices can lower the net worth of households, leading to a decline in their confidence and willingness to spend. This can cause a decline in current consumption, as households may become more cautious with their spending. The other options are unlikely to occur as a direct result of a fall in housing prices.

A Sudden Fall in Housing Prices in Potentia Has Lowered