Question

If mortgages and houses are complements in consumption and interest rates decrease, we would expect to see a.​An increase in demand for houses b.​An increase in the quantity of houses demanded c.​An decrease in demand for houses d.​An decrease in the quantity of houses demanded

Answer 1

The statement related to the complements in consumption is "a rise in the demand for houses" is correct.

The information related to the complementary goods are as follows:

• In the case of complementary goods, it have an inverse relationship.
• If price of one good increased so the demand is decreased.
• Also, in the given case, there is an opposite relation between the interest rate of mortgage and the price of the house. It means if the rate of interest is high so the price of the house will decrease and vice versa.

Therefore we can conclude that The statement related to the complements in consumption is "a rise in the demand for houses" is correct.

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