Suppose That You Are Buying Your First Home

question 168

Essay

Suppose that you are buying your first home. Current interest rates on a 30-year fixed-rate mortgage are 5%. Lenders expect an inflation rate of 2% over the next 30 years, thus giving them an expected real return of 3%. If actual inflation over the next 30 years is 4% because of a continued rapid expansion of the money supply, would you be better off or worse off by taking out a 30-year fixed-rate mortgage?

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Definitions:

Universal Ethical Principles

Fundamental moral guidelines that are considered to be universally applicable to all individuals regardless of culture, time, or situation.

Peacemaking Criminology

An approach to criminology that focuses on resolving conflicts and preventing crime through non-punitive means.

Pyramid Of Concepts

A hierarchical structure of ideas or concepts, arranged from the most general at the base to the more specific at the top.

Peacekeeping

The maintenance of international peace and security by international organizations through military or non-military means.