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Why did the housing boom of 1997 2006 show evidence of time bunching?

Why did the housing boom of 1997 2006 show evidence of time bunching?

I. As banks began to increase their portfolio of mortgage loans, more and more banks began to offer fast mortgage loans in hopes of making more profit.

II. As builders saw the increase in home building, they also jumped on the bandwagon and started building new homes in hopes of making greater profits.

III. As consumers saw other consumers purchasing houses in anticipation of rising prices, they also purchased new homes in hopes of increasing their wealth.


I only

I and II only

II and III only

I, II, and III


Higher labor adjustment costs increase the effect of a real shock on real GDP growth.


True or False


Suppose a restaurant moves to another city and its manager asks the restaurant's two cooks to move there as well. Cook A is single and has no children to support. Cook B has a family with five children in grades K-8. Which of the following is the most likely outcome?

  1. Cook A is more likely to move because of a lower labor adjustment cost.
  2. Cook B is more likely to move because of a lower labor adjustment cost.
  3. Cook A is more likely to move because of a higher labor adjustment cost.
  4. Cook B is more likely to move because of a higher labor adjustment cost.

Top Answer

i).I, II, and III ii).True iii).Cook A... View the full answer

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