8. Suppose the mortgage market is initially in equilibrium (label this point A in a sup ply...
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8. Suppose the mortgage market is initially in equilibrium (label this point A in a sup¬ ply and demand diagram). Lenders expect the inflation rate to decline, whereas bor¬ rowers expect it to rise. Show the new equilibrium in the market for mortgages, and label it point B. What can you say about the direction of the change in
(a) the interest rate and
(b) the quantity of mortgages?
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Related Book For 
Money Banking And Financial Markets An Economic Approach
ISBN: 9780395643952
1st Edition
Authors: Michael R. Baye, Dennis Jansen
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