California Real Estate Practice Exam

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Prepare for the California Real Estate Exam. Study with flashcards and multiple-choice questions, each question includes hints and explanations. Get ready to ace your exam!

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What influences the price increase of real property when the value of the dollar decreases?

  1. Increased demand

  2. Increased labor costs

  3. Loss of purchasing power

  4. New construction in the area

The correct answer is: Loss of purchasing power

When the value of the dollar decreases, it results in a loss of purchasing power. This means that each dollar can buy fewer goods or services. As a result, the price of real property tends to increase because sellers may demand more dollars to compensate for the decreased value of each dollar in their transactions. Therefore, C - Loss of purchasing power is the correct answer. Options A, B, and D do not directly correlate to the decrease in the value of the dollar. Increased demand, increased labor costs, and new construction in the area can all influence property prices, but they are not the direct result of a decrease in the value of the dollar.

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