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Explanation:When it comes to financial planning, economics plays a major factor in people’s personal finances in many ways, it is an essential part of the world we live in today. When you buy gas, or shop for groceries, plan a vacation, economics is at the core of those choices. So why does economics play such a vital role, what is the driving force behind this? In its simplest form, it’s based on choice. We will look at a few factors that impacts financial planning and the economy, including the use of credit, and how the government affects the economy.
Consumers make choices every day that affect the economy we live in, and in return these choices impact one’s personal finances. Take for instance, buying clothing at retail establishment that is trending,…show more content…
They have the option to use cash, check, or credit. Cash and checks are simple and straight forward, you have money earned and you spend the amount you want to spend. Credit on the other hand involves a bit more complexity, because it is borrowed or promissory money one is using. Credit plays an important role in personal finance and the economy. According to an article by the Federal Reserve Bulletin,
By offering consumers both a means to pay for goods and services and a source of credit to finance such purchases, credit cards have become the most widely used credit instrument in the United States. As a payment device, credit cards are a ready substitute for checks, cash, and debit cards for most types of purchases (Federal Reserve, 2013).