Xeco 212 – a New House EconomyA New House EconomyCarrine HamlettXECO/212March 11, 2012Chiara YatesA New House Economy Before making any type of large purchase you must always think about the marginal cost versus the marginal benefits. There are times when the profit turns out better than the price making the purchase an economically reasonable one. This is specifically appropriate when purchasing a home, which is considered a large purchase to make as an individual. The strength of the economy as a whole can affect the marginal benefits and marginal costs when making a choice to purchase a home. According to Mankiw (2007), some buyers think because the economy is doing good that it is a good time to purchase a house. During this time the consumer believes that the economy will increase instead of decrease, and they are not considering how much their mortgage payment will be. Because of this they may think that the marginal benefits are higher than the marginal costs. When we are in a recession, a potential purchaser may think it is not in his or her best interest to purchase a home during this time. Another way it can affect home ownership is for the following reasons; it can decide the market price that has to be paid at closing and important factor involving interest rates.
If the government were to remove tax deductions on mortgage interest, this will make owning a home much cheaper. It would affect the housing market because the demand for houses will decrease and the cost for houses will decrease even greater. When the government decides to lower spending to help the budget, they choose not to make any form of large purchases. The government is in control of the entire industries and markets and they are familiar with the different types of movements and the results of their procedures. ReferencesTax Incentives and Demand for Mortgage Debt: Evidence from the Finnish 1993 Tax ReformSaarimaa, Tuukka; International Journal of Housing Policy, March 2010
(p18) The Finnish Bankers’ Action (BAR) is a policy-making body that promotes the management of financial intermediaries. As part of its program there is a general policy on the supervision of the sector of interest with emphasis on its primary role in the control of the economy. The agency provides a framework for implementing national policy on the regulation of financial intermediaries and issues with regulatory status and liquidity. Its principal function in terms of promoting national interest is to identify the best way to address financial intermediaries’ problems as well as providing a framework to implement common measures in various sectors of the financial sector such as the management of the supply side, management of the foreign exchange and payment of tax and interest, and so on, such as the reduction of foreign exchange risk. Bankers’ Action in Finland — The BAR was established in 1991 (I’m looking at you, Ruhr) and its main aim is to make public the role of the government in the management of the financial intermediaries. In the 1990s the government of Finland decided to implement a national financial plan designed with a focus on protecting private bank loan guarantees and ensuring that the state does not make loans to foreign banks. This was established through the BAR to improve both competitiveness, the control of banks by consumers and the financing of national economy and social services. The Bankers’ Action in Finland – In 1995 and after the formation of the government it decided that it would provide government-administered financial intermediators with special training and guidance aimed at ensuring that they did not break any laws or impede their ability to facilitate or facilitate the development of services. After some years the government of Finland was able to implement the new law in 1999 and after several years of development it was finally able to take an important step in achieving the goal of making every effort possible to implement a national financial plan in cooperation with the other major national bodies involved in banking, insurance, and real estate. The BAR became a joint commission of the Bankers’ Action in Finland and Bankers’ Federation of Finland (BSF) and its chief mission was to ensure that the law had the broadest possible basis and a strong impact on all the member state’s major bank subsidiaries. Under the BAR, the banks have not only been instructed to provide for their subsidiaries but also to provide for the management of funds for the local community. On January 30, 2001 the Bankers’ Action took effect. On December 27, 2001 there were about 100 Bankers’ Organizations in Finland , representing some 575,000 people. The National Bank of Finland (BKA) in Finland is a member of each of these BKA, and its members work together. The Bankers’ Organization is