A specific policy is described below, based o measures that have been introduced or proposed in the UK, in response to a chronic shortage of affordable houses in many regions.

What is, using the 'demand-and-supply' model, the likely impact of this policy on the equilibrium quantity and price of houses, and how this might affect the UK's affordable housing shortage?

Policy: The government has set up a programme of guarantees to support lending to smaller housebuilders by taking on some of the borrowing risk usually borne by developers in their Projects.