Question 3 / 31:  Which of the following is an example of "negative feedback" in the real estate system?
A  Since the stock of built space cannot readily shrink, rents will fall when demand falls.
B  Lenders make money by issuing loans, so they tend to keep the capital flowing to developers
even during down markets.
C  Real estate markets exhibit inertia, so market participants rationally extrapolate past rent
trends into the future.
D  Growth in space usage demand stimulates increased rents or improved prospects for future rents,
which increases the present value of real estate assets, which improves the profitability of
new development projects.
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Real Estate Finance & Investment Midterm Exam 2003

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Attribution:  Geltner, David, and Tod McGrath. 11.431J Real Estate Finance and Investment, Fall 2006. (MIT OpenCourseWare: Massachusetts Institute of Technology), http://ocw.mit.edu/courses/urban-studies-and-planning/11-431j-real-estate-finance-and-investment-fall-2006 (Accessed 1 May, 2014). License: Creative Commons BY-NC-SA
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