The AD–AS model indicates that the decrease in housing prices increased wealth, stimulated aggregate demand, and generated an economic boom.

Macroeconomics
13th Edition
ISBN:9781337617390
Author:Roger A. Arnold
Publisher:Roger A. Arnold
Chapter8: Aggregate Demand And Aggregate Supply
Section: Chapter Questions
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During 2007 and 2008, housing prices fell sharply.
 
Use the AD–AS model to illustrate the impact of these price declines on output and employment.
 
Evaluate the following statement.
 
The AD–AS model indicates that the decrease in housing prices increased wealth, stimulated aggregate demand, and generated an economic boom.
 
True
 
False
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