The Decision Of Purchase A Car By An Individual A Number Of Macroeconomic Variables

1056 Words Dec 10th, 2015 5 Pages
The decision to purchase a car by an individual a number of macroeconomic variables. These variables play important role in making individuals to either demand more of cars or less of them or also act as supply drivers since producers base their supply and production activities on these factors. Some of the economic factors that affect the aggregate demand of cars include unemployment rates, real GDP, inflation rates, interest rates and housing starts amongst others. This paper shall therefore, focus on unemployment rates and inflation rates and how they have affected the demand of cars over the last two year as well as their effects on the price. Inflation is referred to as the general increase in the levels of prices of different commodities and services in the economy over a particular period of time, (Arnold, 2014). Annual rates of inflation shows the comparison between the current prices with the previous year’s prices. For example, if the inflation rate is 10%, then it means the prices have risen by 10% over the past 12 months. This rate can be measured by using the consumer price index (CPI) or the Retail Prices Index (RPI).this is made possible by using various goods and services in two baskets. On the other side, unemployment refers to a situation where people who are willing and able to do a job does not find the job. Unemployment rate therefore, refers to the measure of the spread of unemployment in the economy and calculated as a percentage of the unemployed…

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