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Unformatted text preview: prefer to save up money. In this case, they feel that the marginal costs outweigh the marginal benefits. The removal of the tax deduction on mortgage interest will reduce demand for houses since it reduces the benefits which consumers can enjoy with the purchase of a new house. Other economic policies can also consumers decisions. For example, when the government increases income tax, consumers will have less disposable income and are thus less willing and able to purchase homes. This reduces demand for houses as well. Alternatively, when government increases government spending by building better infrastructures, it helps to attract investments and promote economic growth. As a result, consumers are more willing and able to purchase new houses and this can result in an increase in demand for houses. Reference: Marginal Costs & Benefits. (n.d.). Retrieved July 17, 2010 from Environmental Literacy Council: http://www.enviroliteracy.org/article.php/1323.html...
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- Spring '11