Product Markets Topic Index

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Housing Starts

Households usually must borrow to finance purchases of relatively expensive consumer durable goods such as homes. Because interest rates are the cost of borrowing, they are a non-price factor that causes the demand for homes to shift. Thus a rise in interest rates will reduce demand for homes, which will be reflected in a decline in housing starts.

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Consumer Price Index (CPI)

A combination of market manipulation by energy firms and tight energy supplies resulted in the failure of California's experiment with electricity deregulation. Since electricity is a production input used across the economy, the rising prices of electricity caused firms' production costs to increase, which in turn caused supply curves in many product markets to decrease. The result was an increase in the price of many goods and services, the production of which requires electricity as an input.

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