Homeowners can deduct interest payments on their mortgages from their federal income tax. If this deduction were removed, how would the housing market be affected?
The deductibility of these interest payments is an attractive feature of home ownership. If this deduction were removed, we would expect fewer people choosing to own their own homes. Additionally, we would expect to see more families in rental housing.
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How does microeconomics differ from macroeconomics? Would the supply of iPhones in the United States be studied under microeconomics or macroeconomics? What about the growth rate of total economic output in the national economy?
What will be an ideal response?
The supply curve for motor oil is the typical upward-sloping straight line, and the demand curve for motor oil is the typical downward-sloping straight line. When motor oil is taxed, the area on the relevant supply-and-demand graph that represents the deadweight loss is
a. larger than the area that represents consumer surplus in the absence of the tax. b. larger than the area that represents government's tax revenue. c. a triangle. d. All of the above are correct.