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A prolonged period of low mortgage rates resulted

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A prolonged period of low mortgage rates resulted [#permalink]

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Difficulty:

  55% (hard)

Question Stats:

58% (01:27) correct 42% (02:43) wrong based on 170 sessions

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A prolonged period of low mortgage rates resulted in a period of the most robust home sales ever. At the same time, the average sale price of resale homes actually dropped, when adjusted for inflation.

Which of the following, if true, would explain the apparent contradiction between the robust home sales and the drop in the average sale price of resale homes?

A) The inflation rate during this period exceeded the increase in the average salary, thus preventing many buyers from securing mortgages.

B) Resale homes represent the best value on the real estate market.

C) Without the adjustment for inflation, the price of resale homes actually increased by a very slight amount.

D) The decrease in mortgage rates was accompanied by a widening of the types of mortgages from which borrowers could choose.

E) The increase in home sales was due entirely to an increase in the sale of new homes.
[Reveal] Spoiler: OA

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Sam GM


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Location: United States (IL)
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Schools: Stanford '20
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Re: A prolonged period of low mortgage rates resulted [#permalink]

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New post 02 Jan 2016, 15:56
gmt1 wrote:
A prolonged period of low mortgage rates resulted in a period of the most robust home sales ever. At the same time, the average sale price of resale homes actually dropped, when adjusted for inflation.
Which of the following, if true, would explain the apparent contradiction between the robust home sales and the drop in the average sale price of resale homes?


ok, so I'll be the first to comment:

we have more home sales, but sale price of resale homes dropped.
what can be the cause.
a correct answer, if put in the below formula, would yield a valid explanation:

because - correct answer - , home sales increased, while in the same time, the price of resale homes dropped.

E) The increase in home sales was due entirely to an increase in the sale of new homes.
only E perfectly fits in here.

Kudos [?]: 378 [0], given: 177

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Re: A prolonged period of low mortgage rates resulted [#permalink]

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New post 25 Aug 2017, 18:06
It took me more than a minute to understand that if more people buy houses, the price will increase.

I did not choose E because I thought E conflicts with the question. After a few weeks of being away from GMAT, particularly critical reasoning, I am forgetting gmat skills.

Kudos [?]: 6 [0], given: 731

Re: A prolonged period of low mortgage rates resulted   [#permalink] 25 Aug 2017, 18:06
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