In the US, most people finance their home purchases using relatively long-term fixed rate mortgages. In the UK, most peo

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In the US, most people finance their home purchases using
relatively long-term fixed rate mortgages. In the UK, most people
finance their home purchases using short-term adjustable rate
mortgages.
a. How does this difference in mortgage finance affect the slope
of the Cd curves in the two countries (with respect to interest
rates)? Hint: Think about how disposable income responds to changes
in the real interest rate with the two types of mortgages
. b. Suppose that the US and the UK have the same MP curves. How
does the difference in mortgage finance affect the slope of the AD
curve?
c. Now suppose that the US and the UK can have different MP
curves. If the two monetary authorities want to have AD curves with
the same slope, how would their MP curves have to differ?