Reference no: EM133040363

1. How can a tax deduction for mortgage interest result in a subsidy for borrowers?

a. A tax deduction reduces taxable income, resulting in lower tax payments. This is only relevant for "itemizing" tax filers. The subsidy amount increases for people with higher income and larger mortgages.

b. A tax deduction reduces tax liability directly, resulting in lower tax payments. This is only relevant for "itemizing" tax filers. The subsidy amount increases for people with higher income and larger mortgages.

c. A tax deduction reduces taxable income resulting in lower tax payments. This policy is available to all tax filers. The subsidy amount increases for people with higher income and larger mortgages.

d. A tax deduction reduces tax liability directly, resulting in lower tax payments. This is available to all tax filers. The subsidy amount is a flat percentage of mortgage payments regardless of income or mortgage size.

e. None of the above.

2.The Post-WWII American housing boom saw the introduction of "tract" housing and mail order housing plans (buyers could pick a style from a catalog and have the plans sent to them). What economic force is consistent with both of these changes?

a. The introduction of cheap credit and mass transit.

b. Monopoly pricing power.

c. Economies of Scale.

d. Agglomeration Economies.

e. The laws of supply and demand.

f. None of the above.