If consumers in Georgia expect the price of new homes to decrease next year, it could lead to...?
A decrease in demand.
An increase in demand.
A decrease in quantity demanded.
An increase in quantity demanded.
Higher prices.
Answer:
If consumers in Georgia expect the price of new homes to decrease next year, it could lead to DECREASE IN DEMAND this year.
Because buyers will wait until next year to buy homes, demand drops.
If people expected the price of new homes to decrease next year, it would lead to a decrease in demand this year as people waited for the price drop. I don't know what the difference is between that and a decrease in quantity demanded, but that would also presumably take place.
Just as a background, that's what was the problem in Japan for a long time. An expectation of a future price drop = expectation of deflation. Japan was a singular case of extended period of deflation in a developed country. As prices dropped, people started putting off consumption because the purchasing power of their yen was actually increasing. In a normal economy, prices increase (inflation) creating a cost if you defer consumption because a dollar tomorrow buys less than a dollar today.
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