The mortgage interest deduction is a Federal tax subsidy offered to homeowners. In determining their Federal...

The mortgage interest deduction is a Federal tax subsidy offered to homeowners. In determining their Federal income tax liability, homeowners are able to deduct from income the value of the interest paid on their mortgages. Explain the difference between policy arguments about economic efficiency versus equity. Define economic efficiency. Define equity.

Expert Solution

EQUITY: Trading equity refers to stock. Accounting and corporate equity refers to the amount of capital contributed by the owners or the difference between a company’s total assets and its total liabilities and real estate equity refers to the difference between an asset’s market value and the debt owed on the asset.

ECONOMIC EFFECIENCY: It is a state where every resource is allocated optimally so that each person I served in the best possible way where the inefficiency and waste are minimized. Each country in the world has labor, capital, and natural resources. Countries differ, however, in the sizes of their population and the types and quantities of capital and natural resources.

Efficiency is concerned with the optimal production and allocation of resources given existing factors of production whereas equity is concerned with how resources are distributed throughout society.

Rahul Sunny answered 2 years ago

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