Answer to Question #237346 in Economics for CCW

Question

Demand Review: ( pick one)

Economists announce that unemployment rate will increase over the next six months. The demand for new homes will (increase/decrease).

Which determinant causes this change?

Answer 1

If economists announce that unemployment rate will increase over the next six months, then the demand for new homes will decrease.

This change is caused by the expectations of possible decrease in income as a result of increase in unemployment rate.