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Unformatted text preview: marginal costs outweigh the marginal benefits. Removal of the tax deduction on mortgage interest The removal of the tax deduction on mortgage interest will reduce demand for houses since it reduces the benefits for which a consumer can enjoy the purchase of a new house. Other economic policies can alter a consumer’s 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. Changes in government spending and taxes When the 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. A NEW HOUSE - ECONOMY 3...
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This note was uploaded on 07/10/2011 for the course ECON 101 taught by Professor Monte during the Spring '11 term at Ludwig Maximilians Universität.
- Spring '11