ECO 561 Week 1 Economic Choice & Economic Decision Making

Jun 28th, 2016
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Consider your last vehicle purchase and the decision making process you engaged in while deciding what vehicle to purchase or if a new vehicle was the right decision. While analyzing your decision, keep in mind that everything from the interest rates to the price of gasoline is driven by the economy in one way or another. Develop a 1,400-word analysis of your decision-making process in which you include the following: • Discuss the role of the interest rate and the cost of financing on your purchase decision. Interest rates are derived from the supply and demand for money and the actions of the Federal Reserve System. What was the rate of interest you paid on your vehicle loan? Were interest rates rising or falling at the time of your decision? • Examine the influence of gasoline prices on the choice of vehicle you selected.Gasoline prices rise and fall dramatically based on economic supply of and demand for crude oil. When gasoline prices are low, Americans buy larger, heavier autos, SU

Word Count: 1770
Showing Page: 1/7
Running head: ECONOMIC DECISION MAKINGEconomic Choice & Economic Decision MakingECO/5611ECONOMICS DECISION MAKING2Economic Choice & Economic Decision MakingThere are many factors that affect economic decision making. Before making aneconomic choice, individuals will have to consider the factors. Most of the factors including theprices of gasoline and interest rates are driven by the economy. In a recent motor vehicle that Ipurchased, various factors played a role in influencing the decision.Role of Interest rate and the cost of financing in the decisionChanges in interest rates may affect the various types of investments. In such a case, thestock prices involved with the vehicle had declined and therefore, the company building the carhad to pay more loans and raw materials and thus led to small profits. Sometimes, interest ratesalso may have a predictable impact on at least a single money renting vehicle bonds. In anothercase, if the interest rates had been rising, they would have driven the bond prices down, and thefalling rates would have increased them. This aspect is because the bondholder may havedecided to sell their bond, and therefore, the current market rates may determine the price. Thisbondholder will, therefore, sell the product for less especially when the interest rates are higherthan the rate of the bond and at a higher price when the interest rates are lower (Evans, 2003).In the cost of financing the vehicle, some elements are assess

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