Recall the Application About the Impact That Home Equity Values

Multiple Choice

Recall the Application about the impact that home equity values have on consumer spending and wealth to answer the following question(s) . From 1997 to mid-2006, housing prices rose nationally by approximately 90 percent and consumer wealth increased by $6.5 trillion, but in the summer of 2006, housing prices began to fall. Home equity is the single largest component of net wealth for most families in the United States, and changes in the value of home equity affect consumer spending.
-According to this Application, the decrease in consumer wealth due to decreases in the value of home equity has

A) decreased consumer spending.
B) increased consumer saving.
C) decreased the marginal propensity to save.
D) increased short-run aggregate supply.