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Home Xeco/212

In: Business and Management

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A New Home XECO/212
September 22, 2012
Jan Cohen

A New Home
When deciding to purchase a home my husband and I had to ask ourselves how the government bodies affect the housing market. The answer to that question is it the government body plays a big part. The strength of the economy at the time will make us feel comfortable or uncomfortable about the purchase of a new home. We realize a new home will be a large amount of money and time devoted, the stability of the economy is a big factor.
The use of marginal benefits and costs will help us determine if it is the correct time to make the purchase. Marginal benefit gives us the satisfaction of our purchase, with the maximum amount we are willing to pay for it. For example if purchasing a three bedroom house costs much more than a two bedroom but we are happier with the three bedrooms then it is a marginal benefit. Marginal cost is the theory that the more houses being built at the time, the lower the cost will be. (Marginal Costs and Benefits, 2009) In times when it is called a buyers’ market shows us that the marginal benefit is better than the marginal cost. During economy hard times we are more concerned with marginal cost than marginal benefit.
The government decides the interest rates and tax deductions for consumers when purchasing a home. The lower the interest rate, the bigger the tax deduction, will increase the probability that we will purchase a home. This affects the marginal cost and marginal demand by increasing the demand for home ownership. This will give us extra money to spend with putting money back into the economy because we are spending less on taxes. A first time home owner tax deduction gives us the incentive to purchase a home.
In conclusion, government spending affects our decision to purchase a home because it also affects the economy. When the government spends more money it…...

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