A New House - Essay

1800 Words Jun 14th, 2012 8 Pages
A New House-Decision 1

A New House-Decision

Angel M. Davis

Axia College at University of Phoenix

A New House-Decision 2

In this paper I will discuss which principles of economics directly relate to my decision of purchasing a new house. I will discuss the marginal benefits and cost which will help me make a firm decision. I will also explain how the strength of the economy affects my decision. I will also asses how international trade and the domestic economy played a role in the strength of the economy.

I think that principle one, four, and seven are important to the decision making process of buying a house.
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I may have to look at a smaller house, or lease a house.

I think that the department of national treasury and the central bank can have an effect on the housing market. When the central bank starts increasing interest rates this has a huge impact on my decision to buy or lease. I think the national treasury and central bank also have an influence on the economy. However, economic fluctuations can be irregular and unpredictable. According to Mankiw, N. G., (2007) “economic fluctuations are not at all regular, and they are almost impossible to predict,” (p. 740). For anyone that is financially stable this is a buyer’s market for houses. Although my studio apartment is small and my family is expanding I have to make sound decisions because I would not want to lose my new home due to foreclosure. Fiscal policy plays a huge role in the strength or weakness of the economy. I think the government can stimulate the economy by cutting taxes, this encourages people to spend more money. Lower taxes will also encourage people to buy houses. Since taxes are on the rise, I have to make the decision if a house is really appropriate to buy in this market. Our economy has slowed down because taxes are being increased and spending is being cut and because the government has cut back on the money supply and increased interest rates. In order

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