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Microeconomics

13th Edition
Roger A. Arnold
ISBN: 9781337617406

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BuyFindarrow_forward

Microeconomics

13th Edition
Roger A. Arnold
ISBN: 9781337617406
Textbook Problem

If lowering lending standards can indirectly raise housing prices, can increasing lending standards lower housing prices? Explain.

To determine

The impact of subsidy on the demand curve.

Explanation

Yes, when the lending rates are low and the interest rates are also lower, it implies that loans or mortgages are easily available at a cheaper cost. This will lead to an increase in the demand for housing as the housing financing can be easily availed. This increase in the demand would result in a higher price for housing as housing is a limited resource...

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