XECO 212 Week 7

CheckPoint: A New House Economy

The difficulties of the economy affect many of the decisions you make as a consumer. No more so than when you are buying a house. The health of the economy is a factor you must consider when buying a house. Sometimes the economy favors sellers and at other times it favors buyers. This CheckPoint helps you refine your decision to buy a house; it prepares you to explain in your final project how the strength of the economy, government spending, and taxes affect the marginal costs and benefits of your decision.

Consider the role of government bodies that affect the strength of the economy.

Assume for this CheckPoint that purchasing a new home is a major decision requiring a substantial financial outlay where the wrong decision has long-term financial consequences.

Submit a 250- to 300-word response addressing the following points:

Explain how the strength of the economy as a whole could affect the marginal benefits and the marginal costs associated with a decision to purchase a home.

How does the removal of the tax deduction on mortgage interest affect the housing market?

DQs

Post your response to the following: How does the federal government implement its fiscal policies? Given economic conditions today, do you suggest expansionary fiscal policy or contractionary fiscal policy? How would your suggestions affect production and employment? Why?

Post your response to the following: Assume the government is running a budget deficit. Should the government raise taxes to balance the budget? Should the government decrease spending to balance the budget? What are the pros and cons of each action?