(b) In the U.S., mortgage interest payments are tax deductible. Thatis, a mortgage borrower can pay less income tax 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? What about the impact on the overall quantity of mortgage lending and mortgage interest rate?(c) In the U.S., much of mortgage lending is guaranteed directly or indirectly by the Federal government. That is, if you are an investor (lender) in the mortgage market, you don’t have to worry about the mortgage borrowers defaulting. In case of a default, the government will pay you.Question: How does this impact the supply curve, demand curve, as well as equilibrium quantity and interest rate in mortgage lending?AccountingBusinessFinancial AccountingBCOR 3100
