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Unformatted text preview: it. So in this case the consumer would believe that the marginal cost 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. There are also other economic policies that can hinder a consumers decision to purchase a new home. When the government increases taxes the consumer will then have less disposable income and dont believe they are able to afford all of the cost that comes with purchasing a home. When this happens the demand on homes also decreases. If the government increases the budget on government spending and benefits that will attract investments and promote economic growth. Then consumers will be able to purchase new houses that can increase the demand for houses. Loretta Campbell 03/24/2011...
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- Spring '10