Cycle length is governed by macro factors, including economic conditions in other countries
A worked RES examination question on macro micro factors, from our Paper 1 bank — with the rule it turns on, and why each of the four options is right or wrong.
The question
Reviewing three decades of index data, a salesperson notices that one complete cycle ran a little over five years while another took closer to fifteen, with no obvious pattern between them. He asks a colleague whether the length of a cycle can be predicted in advance from the characteristics of the properties transacting during it — their type, their age, their location — or whether something else altogether governs how long a cycle runs.
Which statement is correct?
The answer, and why
Answer: D
The rule. Cycle length is governed by macro factors, including economic conditions in other countries. It is neither fixed nor determined by the characteristics of individual properties.
Why D is correct. It identifies macro factors, and expressly includes conditions abroad.
The other options.
- A treats cycle length as constant, which the stem's five-versus-fifteen contrast contradicts.
- B attributes it to micro characteristics, confusing what moves one property with what moves the market.
- C attributes it to the number of agents.
Exam note. Anything governing the market as a whole, including its timing, is macro.
More on Macro micro factors
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