Question

If individual income rises because of a boom, then the demand curve for new houses will ________ and the equilibrium quantity of new houses will ________.

Not shift; not change.

Shift to the right; increase.

Shift to the right; decrease.

Shift to the left; decrease.

Answer 1

If individual income rises because of a boom, the demand curve for new houses will **shift to the right** (as people are more willing and able to buy new houses), and the equilibrium quantity of new houses will **increase** (as a result of higher demand).

So, the correct answer is: **Shift to the right; increase.**