Economics · Macroeconomics

Which of the following statements is NOT correct regarding residential investment?

Verified Solution4 OptionsUpdated: October 2026👁️1 View

1The cost of owning a house rises almost proportionately with the real interest rate.
2The demand for housing is insensitive to the nominal interest rate.✓
3The combination of high nominal interest rates and high inflation strongly discourages housing investment.
4It depends on the net real return obtained by owning housing.

Correct answer

The demand for housing is insensitive to the nominal interest rate.

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