The government of Canada has decided that affordable homeownership is a desirable national goal.
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The government of Canada has decided that affordable homeownership is a desirable national goal. Therefore, it has mandated that all lenders may not charge more than 3% interest on home mortgages. The prevailing rate (market equilibrium price) for current mortgages is 4.75%. What impact will this measure have on the supply of mortgages? Explain and draw a graph which reflects this scenario. What action might the government have to take to meet the demand for mortgages.
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