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11) The flow of residential investment illustrates the relationship between the relative price of housing and the ________. A) construction of new homes. B) general price level. C) the rate of depreciation in the housing stock. D) price of an individual home. 12) The relationship between residential investment and housing prices is ________. A) implicit. B) positive. C) negative. D) a one-to-one relationship. 13) Home ownership rates are highest in ________. A) the United States. B) central European countries, e.g. Germany and Austria. C) east European states, e.g. Romania and Slovakia. D) the Benelux countries, i.e. Belgium, the Netherlands and Luxembourg. 14) A person who builds a home, then lives in it, receives ________. A) explicit rents. B) dividends. C) tertiary subsidies. D) implicit rents. 15) Higher demand for housing would be caused by ________. A) an increase in household formation. B) higher residential consumption. C) a decrease in expected future income. D) an increase in home prices. 16) Through its impact on the demand of housing, higher expected income would lead to ________. A) an increase in relative housing prices. B) a decrease in expected house price appreciation C) a decrease in residential investment. D) a decrease in subprime borrowers. 17) A decline in real mortgage rates will lead, other things the same, to ________. A) lower demand for housing. B) tighter financing constraints. C) an increase in residential investment. D) a lower relative price of housing. 18) The provision of funds to the mortgage market through the purchase of mortgage-backed securities and mortgages is performed by ________. A) Fannie Mae and Freddie Mac. B) the Federal Housing Administration. C) the Federal Reserve System. D) subprime borrowers 19) An increase in residential construction would be caused by ________. A) a decline in household formation. B) higher expected future income. C) a decrease in the expected appreciation of housing. D) higher real mortgage rates. 20) A decrease in residential construction would be caused by ________. A) tighter financing constraints. B) higher expected appreciation of housing prices. C) a higher relative price of housing. D) higher expected incomes.

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