Question

If the government sets out to make home buying easier for more people by forcing lenders to accept ____________ down payments and ______________ interest rates, the result will likely be a(n) _______________ in housing prices.a. lower; lower; increase.b. higher; higher; increase.c. lower; higher; decrease.d. higher; lower; decrease

Answer 1

Answer:

If the government sets out to make home buying easier for more people by forcing lenders to accept LOWER down payments and LOWER interest rates, the result will likely be an INCREASE in housing prices

Explanation:

If either interest rates or down payment amounts lower, the quantity demanded for houses will increase a little, possible leading to a small increase in the prices of houses.

If both interest rates and down payment amounts lower, then the quantity demanded for houses should increase a lot, which will result in an increase in the prices of houses.

This happened during the first decade of our century and everything was fine until the interest rates started to increase and people could no longer pay their mortgages and BOOM, the economy busted.