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Week 7 House Eco 212 - involving costs and benefits when...

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Explain how the strength of the economy as a whole could affect the marginal benefits and the marginal costs associated with a decision to purchase a home. How does the removal of the tax deduction on mortgage interest affect the housing market? How do other changes in government spending and taxes affect your decision? The United States mortgage market and the current economic status it is in, is a significant factor for perspective home owners when deciding to purchase a new home. The decision to purchase a new home is one of the most important choices a family has to face. There are many options and measures to consider in the housing market that affect affordability and attractiveness during the home buying process. The strength of the economy is a factor contributing to the volume of home sales over a period of time. When the economy is weak or struggling, consumers examine the factors that have changed
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Unformatted text preview: involving costs and benefits when deciding to make large purchases or investments. Instability of the job market and lower average income levels are results of a weak or struggling economy. Consumers consider the amount of money and the overall cost and the benefits, if any, of deciding when to buy their home. If the conditions result in lower interest rates and lower home prices, some consumers may see these as benefits that are hard to pass up. These buyers are probably not significantly affected by the struggling economy and are taking advantage of the subprime conditions of the housing market. Marginal costs are lower and marginal benefits are higher in this situation and these factors attract buyers and investors. However, the average consumer does not have an excess of disposable income...
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