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Economics

Question: (A) Peggy buys a house for $200,000, with a monthly mortgage payment of $2,000. The current interest rate is 8%. A year later, the interest rate drops to 7% and her monthly payment falls to $1,800. What happens to GDP, NI, PI, C, and SP?

(B) Peggy decides to remodel the house at a cost of $50,000, and gets a second mortgage, which boosts her monthly payment to $2,300. What happens to GDP, NI, PI, C, I, and SP?

(C) The municipal taxing authority decides to boost her real estate taxes from $4,000 to $5,000 based on the increased value of house. What happens to GDP, NI, PI, C, and SP?

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Microeconomics, Economics

Category:- Microeconomics
Reference No.:- M93113833

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