Illustrate graphically the effect the credit market crisis in the United States in 2008 had in the market for existing single-family homes
Assuming the demand for existing single-family homes is relatively inelastic, what is likely to happen to the total revenues of home sellers as a result of the credit market crisis?
The credit market crisis resulted in a large increase in the number of home foreclosures, which in turn dramatically increased the supply of existing single-family homes that were for sale, i.e, the supply curve for existing homes shifted right, causing equilibrium price to fall. Assuming the demand for existing single-family homes is price inelastic, the price effect would dominate the quantity effect on total revenue and the total revenues of sellers of single-family homes would decrease.
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If the Fed raises the interest rate, in the foreign exchange market the demand for the U.S. dollar increases
Indicate whether the statement is true or false
Refer to Figure 4.2. The substitution effect on the quantity of clothing purchased is:
A) the change from C3 to C1. B) the change from C3 to C2. C) the change from C2 to C1. D) the change from C1 to C2. E) none of the above