ECO 212 Week 7 Checkpoint

ECO 212 Week 7 Checkpoint - The government offers tax...

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1. Week 7 – Check Point: A New House – Economy The purchase of a home will basically be the largest most important purchase someone will make in their life. All factors will need to be considered when the decision presents itself. The strength of the economy could sway the decision in many ways. If the economy is in a lull it could bring about concerns for job security which makes the decision to purchase anything even harder. When the economy is going strong the benefits to purchase include the ability to gain equity in a home which will allow the seller to make more off their investment in the home. This example affects the cost for the person purchasing a home. When the economy is strong prices will rise and the values of home rise as well. In a lull someone could get more for their money than they will during good economic times. Along with earning equity on an investment like a home there are other benefits included that make a house a logical choice for buyers.
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Unformatted text preview: The government offers tax deductions on interest paid but if this benefit were taken away it would negatively affect the market as a whole. In some cases people rely upon the tax benefit to help offset the expense of the home. With a market as volatile as the housing market a simple change like tax deductions could cause another hit during an economic downturn. Like tax deductions when the government adjusts taxes or their spending it also has a direct affect on the housing market. If the government were to slow its spending and raise taxes it would force many people to stop purchasing homes. It wouldn’t make sense to buy a home if there was a lot of uncertainty from the government and rising taxes. People follow suite when the government slows spending in order to make sure they are financially secure in case the economy were to take a hit. In order to assure financial stability during a government slow down would be to avoid purchases like homes....
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This note was uploaded on 08/21/2011 for the course BUS 101 taught by Professor Doe during the Spring '10 term at University of Phoenix.

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