Assignment Instructions/ Description
New U.S. home sales surgedPurchases of new U.S. homes surged in December and 2015 was the best year for housing since 2007. Existing-home sales also increased in the best year since 2006. The inventory of existing homes on the market was smaller than demand.Source: Bloomberg, January 28, 2016Where do sales and inventories of existing homes appear in the circular flow of expenditure and income?Explain how an increase in sales of existing homes and a low inventory of existing homes affects real GDP.Sales and inventories of existing homes ______ in the circular flow of expenditure and income and ______ GDP.A.appear as a flow of consumption expenditure from households to firms through financial markets; do not influenceB.are not part of current expenditure, so they do not appear; do not influence
appear as a flow of investment from firms through goods markets to households; increaseD.appear as a flow of investment from households through factor markets; increaseE.are part of the flow of investment, so they do appear; increase
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