Influence of Economics on Household Decision Making

User Generated

INZINZ

Economics

Description


User generated content is uploaded by users for the purposes of learning and should be used following Studypool's honor code & terms of service.

Explanation & Answer

Attached.

Running Head: INFLUENCE OF ECONOMICS ON HOUSEHOLD DECISION MAKING

Title: Influence of Economics on Household Decision Making

Assignment name:
Name of student:
Institution

1

INFLUENCE OF ECONOMICS ON HOUSEHOLD DECISION MAKING

2

Influence of Economics on Household Decision Making
My last big purchase was a washing machine. When considering to buy an appliance, you
can look at many factors that will economically affect the investment. One thing that you look at
is if you want to buy either a new washing machine or a second washing machine. You also have
to consider the cost that is used in financing the cost. In the cost of financing, you have to factor
in the interest rates at that time. In this paper, I will discuss how some economic factors
influenced me to buy the model of the machine that I purchased and then explain if it was a right
decision economically or not.
While purchasing a product, one should consider the total purchase cost and also the
benefits that come from buying the product. Those are the two things that consumers look at
when purchasing a product. Other consumers are also guided by their impulse to make a
purchase. The financing cost is one of the significant factors that affect the decisions making the
process for a consumer to buy a product. The cost of financing is the original cost of the product
and in addition to that the other expenses that come with the process of borrowing money. When
these figures are added, we get the total expense (Effective Federal Funds Rate, 2018). This total
expense is which is related to securing purchase financing. The costs associated with borrowing
are affected by the interest rate that is set by the Federal Bank (Effective Federal Funds Rate,
2018). When the interest rates are low, the cost of financing is smaller as the cost of borrowing is
reduced. Lower prices encourage people to borrow more and thus increase the number of
purchases done. When the interest rates are high, it increases the cost of borrowing. When
interest rates are high, it makes lending unattractive which reduces the borrowers available

INFLUENCE OF ECONOMICS ON HOUSEHOLD DECISION MAKING

3

decreasing the number of purchases done. Here we use the Effective Federal Funding rates. The
Graph below shows the scales in the last 30 ye...


Anonymous
Goes above and beyond expectations!

Studypool
4.7
Trustpilot
4.5
Sitejabber
4.4

Similar Content

Related Tags