英语论文网

believe that they could reduce their inventory.

Interest rates are falling due to a decrease in housing prices. With lower prices comes a decrease in the money demanded which in turns lowers interest rates. With lower interest rates, the quantity of homes on the market and building supplies will increase. These increases will affect the job market in a negative way. Because of the change in quantity of homes and building supplies, the aggregate demand curve shifts to the right.

Macroeconomic variables are important here because of the interest rate, the price levels of new homes, and the output of builders completing new homes. However, short-term fixes affect the short-run aggregate supply curve that is upward sloping. Because of this, the decreasing price of new homes cannot balance the supply and demand. However, the lower interest rate does bring the money market into equilibrium.

Brown (2008) states that one of the largest problems we have to overcome is the fact that the consumer does not have any confidence in our economy. We are coming into the summer season, which is typically the best time to sale a home. People are out looking at homes but there is not an increase in sales at this point. There needs to be sometime of incentive to push lookers into buyers.

Congress is looking at one idea to push the sale of foreclosed homes. They are proposing a $7,000 tax credit to anyone who buys a foreclosed home. Congress is thinking that this will stabilize prices of homes as well as keep existing neighborhoods from deteriorating. However, some people think this would hurt the economy more than help it. The thinking is that this would continue to drive down house prices. The reality is that people want to see some stability without affecting housing prices. This would also not help the people whom have already filed bankruptcy or the ones that are going to have to file for bankruptcy.

In the last 18 to 24 months, people were astounded to see the large prices that were being paid for housing. They are just astounded now to see the decrease in price. Homeowners purchase a house thinking it is an investment; and that they will receive a profit when they sale. If a homeowner wants to sale their house in today's economy, they more than likely are going to take a loss. If people in a neighborhood start selling their homes at a loss, typically everyone in that neighborhood will be affected.

This causes a negative externality because of the neighbor selling his property for less and driving down neighborhood properties. If the homeowner keeps holding out and he is foreclosed on, the neighborhood will suffer. Housing is excludable because homeowners have to pay for it. You do not have a choice not to pay, because it could be taken away.

Financial institutions say that they want to help troubled borrowers. Unfortunately, many foreclosure prevention counselors say they are running into obstacles. Since financing is a private good, it does make it harder to find loan companies that are willing to help the troubled homeowner. A financial institution can only have so many bad loans. Therefore, they cannot help everyone. The government can however, come and offer homeowners some type of relief.

Gas prices are having a negative impact on our economy. Until gas prices stabilize, it is hard to predict what the outcome will be. The gas pr