how has the economy play a role when it comes to people and credit cards. or better yet, how has credit cards effect the ecomony.
2006-09-25 04:58:53 · 5 answers · asked by lala_jonesy 2 in Arts & Humanities ➔ History
A person's individual debts are, by American statistics, way too high. This is bad for the individual, who has to cover these debts, but I'm sure the business world is loving it. Spending increases the business economy, however, it decreases joy and freedom in the person's life who is covered up in debts.
2006-09-25 05:03:15 · answer #1 · answered by Anonymous · 0⤊ 0⤋
Supply, demand, and pricing. Inflation, recession, unemployment, and savings. You could probably write an economic treatise on the subject of credit cards.
The theory of supply and demand stipulates that consumers will generally pay the price indicated by the intersection of the supply and demand curves. Credit is like adding elastic to the demand side of the equation and result in the payment of a higher price. If consumers were limited to their resources at any given time, they would be forced to either pay for nonessentials after they had purchased their necessities or they would be forced to dip into their savings to accommodate their purchasing wishes.
If there were no credit cards, the demand for most goods would be highly unpredictable and require constant mark-ups and mark-downs to balance the inventories. The result would be more ups and downs in the economy as a whole, as well. E.g., When manufacturer A has a new product he wants to sell, he hires employees to help him produce it. The jobs created with that employer are contingent on sales. No sales, no profits; no profits, no business, no jobs. But, if the consumers liked his product and had no money, but they had the ability to use credit, voila - a sale.
2006-09-25 12:42:57 · answer #2 · answered by Scott K 7 · 0⤊ 0⤋
Credit cards affect the economy in many ways. By charging your credit cards by purchasing you drive up sales. If sales go up the economy is growing because you are creating a demand for whatever product or service you just bought. This means the company who manufactures that product will need to make more and the retailers will Need to resupply their shelves. You help keep people employed at the manufacturing and retail levels. You also help interest rates go up since the economy is booming. By interest rates going up you help keep inflation down. At the same time by racking up you credit card and not paying it off every month and you will eventually max it out and stop using your card for purchases. You will cause manufacturing to slow down thereby, causing layoffs which means less spending power and a possible recession. The government will have to lower the prime rate to get the banks to lower the interest rate to get you to spend money again. I hope this makes sense to you.
2006-09-25 15:22:59 · answer #3 · answered by JRod 1 · 0⤊ 0⤋
a person uses a credit card, they end up paying more than they should because of intrest. so instead of paying 50 bucks you pay $52 that goes to the company and they get richer. now credit score, if you pay your bills ontime your credit score goes up, the higher the score the cheaper your intrest rates are and it is easier to buy a home etc
2006-09-25 13:38:48 · answer #4 · answered by gets flamed 5 · 0⤊ 0⤋
They make you think you have more money than you really have.
They make it too easy to spend money you don't have.
They are an easy way to get into debt way over your head.
2006-09-25 12:35:37 · answer #5 · answered by The Gadfly 5 · 0⤊ 0⤋