Refinancing Home Mortgage
In: Mortgage Loan
22 Sep 2010Let us assume that the elasticity of demand for new housing in terms of
The mortgage is -1.3. Then:
A) the mortgage interest rate will increase by 1.3 percent when the demand for new
Housing units increased by 1 percent
B) The demand for new homes by 1.3 percent decline when
Higher mortgage rates by 1 percent.
C) The mortgage decline of 1.3 percent when the demand for new
Housing units increased by 1 percent
D) The demand for new homes will rise by 1.3 percent if the mortgage
higher rate of 1 percent.
responding? or help me explain the problem in simple terms
The answer is B. Elasticity =% change% change q / p.
X -1.3% change in the exchange rate =% of housing demand.
X = a -1.3% change in residential demand = decrease of 1.3%
This is about mortgage information questions.
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