The federal government and many state governments gave tax credits to first-time home buyers in 2009 and 2010.An effect of these tax credits was to

Question

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The tax credits effectively increased the purchasing power of first-time home buyers, leading to an increase in demand for houses. When demand increases, prices tend to rise, assuming the supply does not increase at the same rate. Therefore, the tax credits made the price of houses higher than they would have been without the tax credit.

The Federal Government and Many State Governments Gave Tax Credits