Sociology Concepts and their Applications

Different sociological concepts deal with the understanding of human behavior
and the whole society. It is applied to understanding social and human cognition. The
unit of sociology analysis ranges from the individual level to a large group of persons.
Sociology is divided into structural functionalism, conflict perspective, and symbolic
interactionism (Johnson, 2022).
According to structural functionalism, society is viewed as a vast network of
interconnected pieces that function harmoniously. This strategy emphasizes the
significance of the social structure or any generally consistent social activity pattern.
Second, this method considers how any structure affects society as a whole and how
any social pattern affects that operation (Dillon, 2020). For example, the changes in
interest rates affect society in terms of buying or renting properties.
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Symbolic interactionism is seen as a micro-level strategy or individual strategy. In
symbolic interaction, society is seen as a drama or ongoing event that is constantly
evolving.
This method places a lot of emphasis on using symbols to communicate and exchange
ideas. According to this theory, society consists solely of the reality that individuals
create for themselves via their interactions with one another (Dillon, 2020). For
example, when you hear the word dog, your brain brings a picture of a four-legged
canine.
Last but not least, the conflict method is regarded as a macro-level strategy that
emphasizes inequity. In society, resources are distributed inequitably so that a minority
benefits at the expense of the majority. Conflict arises in a community due to the
unequal distribution of wanted resources. Those with the means create systems and
procedures to preserve these resources. This perspective sees society as being
constantly at war because those who lack resources are constantly coming up with new
ways to acquire them (Dillon, 2020). For example, employer always wish to pays as little
as possible for labor, while the employe wish to maximize their salaries.
Changes in Interest Rates
Lending money comes with a fees called an interest rate. Alternately, it might be
the payment for the risks and services involved in lending money. The situations
stimulate borrowing, lending, and spending, which keeps the economy running.
However, market interest rates always fluctuate, and various loan kinds offers different
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interest rates. Some of the factors in society that cause change in interest rate are the
lenders and borrowers, the type of loans, etc.
The Level of Risk
The possibility of the debt being repaid is referred to as the risk. Higher interest
levels result from a larger likelihood that the loan won’t be repaid. The interest rate will
likely be lower if the loan is “secured,” that is, if there is some kind of collateral that the
lender will be able to seize if the loan is not repaid, for example, a car, This is so
because the collateral covers the risk factor.
Secondly, there may be little to no loss on principle loaned out for some loans
that may be easily turned back into cash. Generally speaking, these loans have lower
interest rates. Since the government is the borrower, there is naturally less risk
associated with government-issued debt securities. The rate on Treasury securities is
often low due to this, plus the fact that the interest is tax-free.
Risk is affected by time as well. Long-term loans are more likely to go unpaid
since the adversity that causes default can develop over a longer period. Additionally,
lengthy Finally, a loan’s face value is much more susceptible to inflationary impacts than
a short-term loan is. Therefore, the lender should be compensated with greater interest
the lengthy the borrower has to repay the loan.
The Level of Demand and Supply
The supply and demand of credit affect interest rates level; higher or lower
demands for credit will result in higher or lower interest rate, respectively. In contrast,
the highest credit availability will result in lower interest rate, while a lowest credit
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availability will result in higher rate. Lenders’ decisions to postpone loan repayment
result in a reduced amount of credit accessible to the economy.
The Government
The interest rates that banks set on the money they lend is influenced by the
federal fund rates or the price that institutions charges one another for extremely shortterm loans. Later, other short-term loan rates will gradually be influenced by that rate
(Kuang et al., 2019).
When the government purchase additional securities, bank receives an influx of money
that exceeds what they can use for lending, which lower interest rate. When the
government sell securities, bank funds are diverted for the transactions, leaving them
with less money available for lending, which forces an increase in interest rate (Jareno
et al., 2019).
Inflation
Interest rate levels will also be impacted by inflation. Interest rates are more likely
to increase the highest the inflation rate. It happens because lenders will demand higher
interest rates to make up for the declining purchase value of the money they will
eventually be paid (Jareno et al., 2019).
Effect of Interest Rates on the Ability to Buy or Rent Property
Capital Flow
Interest rates have a big impact on mortgage rates and funding expenses, which
impacts costs at the individual property level and, consequently, values.
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The largest influence on necessary rates of return and investment prices, however,
comes from the supply and demand for capital as well as competing investments.
The Federal Reserve Committee’s policies have directly impacted the value of all
investments. It has shifted its emphasis away from monetary policy and toward
regulating interest rate to boost the economy or ward off inflation (Sommer & Sullivan,
2018).
Interbank exchange rates are falling, which lowers the cost of funds and allows
more money to enter the system. The availability of funds, on the other hand, declines
as rates increase. Regarding real estates, the variations in interbank lending rates may
increase or decrease the available cash for investments. Demand and supply, or the
quantity of money available for real estate purchase and developments, are influenced
by the amount of capital and value (Sommer & Sullivan, 2018).
Valuation Fundamentals
The supply and demands for home, as well as the expense of building new
homes, all have an impact on real estate values. However, there’s more to evaluate
than that, particularly while considering how the government controls interest rates,
capital flows, and financing costs.
Discount Rates
Discount rates will alter as change in the interest rates that makes them up,
whereas risk premiums vary as a function of supply and demand and other market risk
factors. Real estate values decrease when the needed returns on alternatives or rival
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investments grow; in contrast, prices rise when interest rates decrease (Forrest, Murie &
Williams, 2021).

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