the ecomony collapsed in the fall of 2007. a lot of it had to do with the housin
ID: 1178866 • Letter: T
Question
the ecomony collapsed in the fall of 2007. a lot of it had to do with the housing market. in hindsight it turns out that the housing market was "artificailly high." in esssence there was a strong demand for housing for a lot of reasons and this "shifted" the demand curve. research some of th eprograms or policies which shifted the demand curve for housing. Which way did the demand curve shift? what impact did the shift in the demand curve have on home prices? what programs or policies would you put in place to prevent this from happpening again?
Explanation / Answer
A shift in the demand curve is caused by a factor affecting demand other than a change in price. If any of these factors change then the amount consumers wish to purchase changes whatever the price. The shift in the demand curve is referred to as an increase or decrease in demand. A movement along the demand curve occurs when there is a change in price. This may occur because of a change in supply conditions. The factors affecting demand are assumed to be held constant. A change in price leads to a movement along the demand curve and is referred to as a change in quantity demanded.
The demand curve for ice cream, for example, shows how much ice cream people are willing to buy at any given price, holding constant the many other factors beyond price that influence consumers
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