Posted: February 23rd, 2017
Discuss the following in regard to your household at the time of your purchase: Were you employed? Was the economy growing or contracting (recession)? If you were employed, did you take into consideration the risk that you might lose your job if a recession occurred during the period of your loan pay-back? A basic assumption of consumers making purchases of large items requiring financing is that their household cash flow will be adequate to cover the monthly loan payments. For most Americans, this also means assuming continuation of their present wages. But many jobs are sensitive to rises and falls in the business cycle, as witnessed by the 10% unemployment rate of the past “Great Recession.”
Evaluate the financial trade-offs made when making your purchase. This includes lower maintenance costs for a newer vehicle versus a car payment and higher insurance among other factors.
Discuss the influence of any of these Federal or state level programs on your decision to purchase a vehicle; or if these did not factor into your decision, explain why or why not: Buying fuel efficient vehicles such as Flex fuel, hybrids and electrics Converting existing vehicles to use alternative fuels (Flex fuel) Removing old, fuel inefficient, and high polluting vehicles from the highways Explain the influence of environmental factors such as emissions and health concerns on your decision. Discuss the ways in which your purchase illustrates one piece of the circular flow model of economic activity. What are the other parts? Develop conclusions about the economy’s influence on personal and business decision making such as purchases, investments, and so forth.
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