Suppose that in a wave of pessimism, housing prices fall by 10% across the entire economy. a. Has the stock of real assets of the economy changed? Yes No b. Are individuals less wealthy? Yes No

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Social Studies

Smith

14 June, 03:35

Suppose that in a wave of pessimism, housing prices fall by 10% across the entire economy. a. Has the stock of real assets of the economy changed? Yes No b. Are individuals less wealthy? Yes No

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Jabari · Answer 1

Answer: a. No

b. Yes

Explanation: A wave of pessimism is a period of increased doubt about the economy, resulting in reduced spending which in turn impacts economic growth negatively.

The stock of real assets in the economy does not change, but the perceived value will fall because of people's negative perception of the economy.

However, individuals are less wealthy because the 10% decrease will reflect on their property. Because property is one of the items that makes up the totality of an individual's wealth, their wealth will also decrease.