Answer:
(i) correct a misallocation of resources because too much of the economy’s capital stock is tied up in residential housing and too little is invested in corporate capital.
Step-by-step explanation:
Among the options, the only one that makes sense is the first one. Cutting deductions from a sector - such as real estate - means that the government will be raising tax revenue - fiscal policy. In fact, historically the mortgage industry is a beneficiary of tax deductions.
The fiscal budget is limited and is allocated in sectors where the government deems it necessary. Therefore, withdrawing the tax deduction of the mortgage industry is a way of reallocating these resources to other areas, such as to stimulate some productive sector of the private sector.