Real Estate Boom is an example of

Question

BlackTom AI · Accepted Answer

Consider the phenomenon described: a Real Estate Boom. This event typically manifests as a rapid increase in overall demand for real estate and related services, rather than a shift in the supply side.
Option 1: Positive Supply shock. A supply shock would mean suppliers can produce more (or cheaper) goods, shifting the supply curve to the right. A real estate boom is driven more by buyers and demand exuberance than by a sudden improvement in the ability or cost of supplying housing, so this is not the best fit.
Option 2: Negative supply shock. This would imply higher costs or constraints on supply, causing the supply curve to shift left. That would tend to raise prices due to tighter supply, not reflect the booming demand and rapid price/appreciation typical of a housing boom, so this option mischaracterizes the scenario.
Option 3: Positive Demand shock. This describes a sudden increase in demand for housing and related goods, which aligns with a real estate boom where more buyers enter the market, bidding up prices and triggering a price-rising cycle without a parallel immediate surge in supply.
Option 4: Negative Demand Shock. This would indicate a fall in demand, leading to lower transactions and prices, which contradicts the observed surge during a real estate boom.
In summary, the real estate boom is best understood as a positive demand shock, since the driving force is an upturn in demand for housing, not a sudden improvement in supply or a drop in demand.

W25 ECON D001 52Z Prin Macroeconomics FinalExamECON1

Real Estate Boom is an example of

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