When interest payments on home mortgages and home equity loans are tax deductible,
A) households will keep other forms of debt separate from their home mortgage.
B) households will shift other forms of debt to their home mortgage.
C) households are likely to increase the amount of equity in their home.
D) the overall amount of household debt is likely to decrease in relation to household income.

Question

Quizplus · Accepted Answer

When interest payments on home mortgages and home equity loans are tax deductible, households are likely to shift other forms of debt to their home mortgage in order to take advantage of the tax deduction. This can lead to an increase in the overall amount of household debt.

When Interest Payments on Home Mortgages and Home Equity Loans