Question

3. Describe the governmental subsidies to real estate, and their impact on the economy.

Answer 1

Subsidies are the aid give to firm or an idividual to encourage the production or welfare respectively. All the Subsidies aiming the economic growth through the welfare of the state or expanision of production. Susidy introduced to the economy to increase supply and supply enhance the production. In the case of Real Estate Government provide subsidies because Real esate is one of the major industries in the world.Government give real estate subsidy as part of incresing welfare and infrastrucure development and industrial development.While impliment government subsidy introduce in real estate economy then property price and housing price increase and supply increase this leads to construction increase this encourage the economic growth. More over Government introduce subsidy as part of assure the house or property for all this increase the economic welfare this also encourage the economic development. Lastly Government subsidies in real estate as loan subsidy this will leads to people took loan to buy properties. Thus subsidies in real estate leads to economic growth. How real estate enhance production through supply increase is shown in the following figure. X axis shows real estate output and Y axis shows price of household.