Nobody Could Have Predicted, Volume CCCXL
McGill University Macroeconomics Comprehension Exam, May 2003, Question 10 (Essay):
The stock market bubble burst in the spring of 2000. The popular pres now talks about a housing bubble, referring to ever rising prices of houses in North America (and elsewhere). They say that if the housing bubble bursts it will have a much more severe effect on the economy. Do you agree? Sketch a model that would capture your argument.