Question

1. Assume Carlos has just graduated and landed on a job paying $50,000 per year. He plans to save $500 every month and buy a new Toyota Prius car. He currently drives a used Ford Fairmont, which is a gas guzzler. He is worried about the economic situation which may result in layoffs and possible inflation.
   1. is Carlos’ plan SMART? Describe details.
   2. how can economic factors such as inflation and employment situation affect his ability to achieve his goal?

Answer 1

a. Yes, I think Carlos is smart since he is saving money to buy the car instead of taking it on loan, given that he is worried about the economic situation and possible inflation.

b. With inflation, the price of the new car will rise and it will take Carlo more time to save more money required to buy the car.
With increase in unemployment, Carlos may lose his job, and again he need to find another job which will take more time to accumulate the amount needed to buy the car.
In both the cases, Carlos will take more time to buy the car.

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