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(b) (1 point) In the U.S., mortgage interest payments are tax-deductible.1 That s, a mortgage borrower can benefit by paying lower income taxes if she
(b) (1 point) In the U.S., mortgage interest payments are tax-deductible.1 That s, a mortgage borrower can benefit by paying lower income taxes if she also pays a mortgage. Question: consider the mortgage lending market. How does the policy of allowing for mortgage interest tax deduction impact the demand and supply curves of mortgage lending?2 What about the impact on the equilibrium quantity of mortgage lending and the equilibrium mortgage interest rate?
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