Question

How might a sudden increase in​ people's expectations of future real estate prices affect interest​ rates? A. Interest rates would decrease because real estate would have a relatively lower rate of return compared to​ bonds, which would cause the demand for bonds to increase. B. Interest rates would decrease because real estate would have a relatively higher rate of return compared to​ bonds, which would cause the demand for bonds to decrease. C. Interest rates would increase because real estate would have a relatively lower rate of return compared to​ bonds, which would cause the demand for bonds to increase. D. Interest rates would increase because real estate would have a relatively higher rate of return compared to​ bonds, which would cause the demand for bonds to decrease.

Answer 1

Hello there! A complete answer is below!

Answer:

A. Interest rates would decrease because real estate would have a relatively lower rate of return compared to​ bonds, which would cause the demand for bonds to increase.

Step-by-step explanation:

Interest rates would decrease because companies would realize customers aren't buying anymore. Due to low business and little profit, they would be forced to cut prices. There would be a sharp rate of returns rather than bonds. This would cause the rate of bonds to decrease. So, the answer is A.