<u>Buying a home during a recession is a good decision for some consumers because Housing prices are down, it is easier to get a mortgage, and there is less demand that means more options to consumers and less competition with other buyers.
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Further explanation:
Recession: Recession is a part of the short-run business cycle in which there is a major downfall in economic activity. It is featured by a strict downfall in the aggregate demand of an economy. It negatively affects the real variables of the economy like real GDP, real income, employment, and industrial output. Recession affects the financial system of the economy through a downfall of stock market indices and loss of investors’ confidence.
Justification for correct and incorrect option:
*Housing prices are down: This option is correct.
Recession is featured with a low level of demand for most of the goods and services. As a result, market is characterized by low prices in recession. Recession is a suitable time to buy houses for consumers because of low home prices in that period.
*It is easier to get a mortgage: This option is correct.
Banks often find low-interest to sell loans in times of recession because of a low level of economic activity including investments and industrial output. But banks are willing to sell loans in recession at low-interest rates to earn profits. It is easier to get a mortgage for purchasing home in recession.
*Less demand means more options for buyers: This option is correct.
Buyers in the phase of low demand are able to view more houses that they would not able to view in the phase of high demand. With low prices in recession, consumers can view a large number of houses and can buy a house easily.
*Less demand means less competition with other buyers: This option is correct.
Less demand for houses in a recession means less competition for house buyers. They don’t have to pay a high price or high commissions to purchase houses in recession. Less competition in recession gives house buyers a lot of advantages.
*More houses are on the market: This option is incorrect.
Recession does not change the number of available houses in the market. It just gives lot of advantages to home consumers to buy homes in a recession.
Learn more:
1. Learn more about the demand and supply
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2. Learn more about the collateral loans
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3. Learn more about the demand curve
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Answer details:
Grade: Senior School
Subject: Economics
Chapter: Aggregate Demand and Aggregate Supply
Keywords: why, might buying, a home, during recession, good decision, consumers, check all, that apply, housing prices, are down, easier to get a mortgage, less demand, more options to buyers, less competition with other buyers, more houses on the market, recession, low level of demand, low level of economic activity.