When home owners became less concerned with the true value of their homes and in

Question

When home owners became less concerned with the true value of their homes and instead focused on the value of their homes continually increasing, we had: A) idiotic speculation B) a de-stabilizer C) a housing bubble D) a supply shock When home owners became less concerned with the true value of their homes and instead focused on the value of their homes continually increasing, we had: A) idiotic speculation B) a de-stabilizer C) a housing bubble D) a supply shock A) idiotic speculation B) a de-stabilizer C) a housing bubble D) a supply shock

Explanation / Answer

C) a housing bubble

Reason

A housing bubble is a run-up in housing prices fueled by demand, speculation, and exuberance. Housing bubbles usually start with an increase in demand, in the face of limited supply, which takes a relatively long period of time to replenish and increase. This kind of vague speculation leads to this kind of unstable bubble.

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