Question

Gabby and Gus Malloy recently got pre-approved on a loan for their first house purchase. They are speculating on how much they should bid on their number one choice, a small, three-bedroom bungalow near a major college town. Which of the following indicators may be an important factor in whether they are able to successfully put in a low bid?a. the federal tax rate in that area
b. the unemployment rate in that area
c. the producer's price index in that area
d. the cmi - consumer's marginal index

Answer 1

Answer:

b. the unemployment rate in that area

Explanation:

One of the following indicators that may be an important factor in whether they are able to successfully put in a low bid a small, three-bedroom bungalow near a major college town is the unemployment rate in that area.

When the rate of unemployment is high, inflation is low and prices are low because consumers are not rich enough to afford certain goods.

Hence, a high level of unemployment could drag down rent additionally because apart from inflation being low, a 3 room flat might seem like a luxury good that people will stay away from when income levels are low.