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The federal government took a laissez faire (free market) attitude towards the financial institutions during the late 1990s and early 2000s and permitted the financial markets to take on the creation of new, innovate financial tools, such as insurance against drops in the market (AIG was one of the major companies offering this insurance), no down payment mortgages, and interest only mortgage payments. As a result the demand for housing rose dramatically as more families could afford to buy a home. Using supply and demand curves, demonstrate that impact of these creative, liberal financing methods on the housing market.

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M964841

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