Prior to 2005, it seemed like house prices always rose and never fell. when the demand for housing increases, prices in the housing market rise but not always by very much. for prices to rise substantially, the supply of housing must be relatively inelastic. that is, if the quantity supplied increases rapidly whenever house prices rise, price increases will remain small. many have suggested government polices to increase the elasticity of supply. what specific policies might hold prices down when demand increases? explain.

Crowding out is a phenomenon focused upon most by the macroeconomists of whereby a government deficit interest rates, which in turn private investment spending. this group also believed that fiscal policy is the only thing that can lower natural unemployment. is just as effective in countering recessions as monetary policy. can be used most of the time, but monetary policy becomes a better option when velocity is fluctuating. should be used only if the central bank follows a monetary policy rule. faces problematic lags in propagating changes throughout the economy.