question = 1e
I recommend that they buy the house outside the city centre however their are reasons for and against.
A reason for them staying moving outside the city centre is that the interest rates are low. Since the interest rates are low they are able to get a better deal on the house allowing for a reduced monthly instalments. with the smaller instalments they are able to have a more flexible expenditure which they then are able to either save their money so they can then pay it back in the future to his parents.
Another reason for them moving out is that prices are rising. Due to increase in the house prices they will need to take out a bigger loan from their parents which as a result they are going to need to repay back his father more. So it is better that they get the house now so they are able to benefit from the lower house price.
However if Adam and Claire purchase the house they may not be able to meet their installments. Due to their young age they won’t have a large income so after they put down the deposit it may be difficult for them to meet the monthly instalments causing them to loose the house.
Another reason against the purchasing on the house is that they will need to need use money on transport. In order to get to their workplaces they are going to need to spend money on transport which could further set them back on their monthly instalments potentially making them lose their house.
In conclusion i think they should buy the house as it will allow them to benefit from the lower interest rates as they won’t have as much to pay back in interest. therefore they won’t need to limit their expenditure in the future. In order to increase the amount of money they have access to, they could reduce the frequency of which they go out in the night and use the money to help payback Adam’s father.
AQA economics UNIT 11, 12 mark answer for marking!
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