Tax credit affect market equilibrium for homebuyers-sellers

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Reference no: EM13932647

Scenario

In 2008, the government initiated an $8,000 tax credit for first-time homebuyers in an effort to stimulate the housing market. This means that all first-time homebuyers in 2008 were eligible to take an $8,000 deduction from their taxable income for that year. By offering this tax credit, the government was attempting to influence the housing market.

•How does the tax credit affect market equilibrium for homebuyers and sellers?

•In your opinion, should the first-time homebuyer credit have been increased, extended, or eliminated? Explain your position.

•What likely happened to the supply and demand curves when the tax credit was implemented?

Reference no: EM13932647

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