Choose one of the subjects ( table of content is required) Term Paper

Choose one of the subjects ( table of content is required) - Term Paper Example Consumers tend to purchase more when the interest rates are low, and purchase less when the interest rates are high. This is because low interest rates increase the disposable income available to a consumer, and as such, has more income to spend on purchases, whilst high interest rates reduces the disposable income available to a customer, thereby he or she has less income to spend on purchases. As a natural rule of economics, a person tends to spend more when he or she has a higher amount of disposable income. However, if such a person has lower amount of disposable income, he or she will probably spend less. As such, interest rates primarily tend to affect the middle income and the low-income consumers within the economy who do not have a vast fortune to spend of purchases and luxuries. However, this does not rule out the fact that interest rates also affect the high-income earners within the economy only that its effect on their disposable income is dismal compared to consumers from the other two income brackets. The rich might only feel the effect of high interest rates while investing, especially when the cost of investment raises due to high interests rates. As for shopping and purchase, the rich will probably go for pricy high-end luxury goods and services as they attach price to quality, in the sense that the more expensive it is, the higher quality it is. As for th e other consumers, they tend to purchase within their limits in the sense that higher prices scare them away and reduce their spending and purchasing patterns, while lower prices increase their spending as it increases their purchasing power, As such, interest rates come into play in the sense that higher interest rates equally lead to a rise in common products and services consumed by middle level and lower level consumers. For instance, if a proprietor secures a loan for his or