ECON 1900 Study Guide - Economic Equilibrium, Capital Economics, Unintended Consequences
Document Summary
Sarah kar win au page 1 econ 1900. A reduction in new home construction across canada which fell even more than expected. This decline highlighted the challenges facing builders as they struggle to emerge from the worst housing slump in october. One of the reasons is that the harper government had reined in its previous lax rules for mortgage lending. The maximum amortization period from 30 years to 25 years and decrease the refinancing limit to 80%. New homes construction ruins flow will deteriorate the market"s outlook, less income for people and create housing shortage. Some people think that the decline of new home construction will improve the market"s outlook. A decrease in supply will rise in equilibrium price, the sellers will earn more profit. Although more competition for fewer homes means upward pressure on housing, the quantity sold equals to quantity supplied only. This will cause a decrease in quantity sold.
