Suppose Real Estate Prices Rise by 40 Percent in a Four-Year

Multiple Choice

Suppose real estate prices rise by 40 percent in a four-year period, while goods and services rise in price by 8 percent in the same time period. Population, the stock of houses, and other variables important to real estate prices have remained almost constant. Which of the following is most likely?

A) Real wealth has increased.
B) Nominal wealth has declined.
C) Asset inflation has occurred.
D) GDP has increased by about 40 percent over the four-year period.