The Key Difficulty in Answering the Question: "Would You Be

question 74

Multiple Choice

The key difficulty in answering the question: "Would you be better off financing your new home with a 15-year mortgage at 5% or by borrowing for five years at 4% and refinancing thereafter?" is that

• A) housing prices are very erratic.
• B) the tax deductibility of mortgage interest payments has changed over time.
• C) dollars paid in different periods do not have the same value.
• D) 15-year mortgages are fixed-payment loans while 5-year mortgages are simple loans.

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Definitions:

Surplus Payments

Payments made above the market price, often by a government to producers, to encourage production or as a form of subsidy.

Economists

Professionals who study and apply theories and concepts related to economies, analyzing trends and advising on economic policy.

Henry George

An American political economist known for his belief that people should own the value they produce themselves, but that the economic value derived from land (including natural resources) should belong equally to all members of society.

Land-Rent Income

Income derived from owning land and leasing it for economic use, such as agriculture, construction, or commercial development.