Individual: Influence of Economics on Household Decision Making

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Economics

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Purpose of Assignment

To locate, retrieve, and evaluate the effects of macroeconomic indicators on your own decision making.

Assignment Steps

Resources: Tutorial help on Excel® and Word functions can be found on the Microsoft® Office website. There are also additional tutorials via the web offering support for Office products.

Scenario: Consider your last big purchase such as a car, appliances, home repairs, home purchase, computer equipment, college tuition, or another "big-ticket" item, which are often purchased using loans/financing (by borrowing money). Also consider your decision-making process that led you to choose a particular make, model, or brand of the product (or service) you purchased and whether it was the right time to make the purchase given economic conditions at the time of your purchase. While analyzing your decision, keep in mind everything from interest rates to the prices of complementary and substitute goods are driven by human economic behavior.

Develop a minimum 1,050-word analysis of your decision-making process in which you include the following:

  • Retrieve statistics on Real Gross Domestic Product (GDP) and on Real Personal Consumption Expenditures (PCE) by year for the last ten years. You can retrieve those statistics from internet sources including, but not limited to, the Federal Reserve of St. Louis's FRED web site, the U.S. Department of Commerce's Bureau of Economic Analysis (BEA) web site, or another credible source of your choice. Post these statistics in a single worksheet of an Excel® workbook and submit your Excel® file with your report. In your report, discuss the latest 10-year trends in both GDP and PCE. Also discuss how the trends in GDP compare with trends in PCE. You are encouraged to include graphs of these statistics in your report; you could create the graphs in Excel® and copy them into your report.
  • Retrieve statistics on the Effective Federal Funds Rate and on the Consumer Price Index: All Items Less Food and Energy by year for the last 30 years. You can retrieve those statistics from internet sources including, but not limited to, the Federal Reserve of St. Louis's FRED web site, the U.S. Department of Labor's Bureau of Labor Statistics (BLS) web site, or other credible sources of your choice. Post these statistics in a single worksheet of an Excel® workbook and submit your Excel® file with your report. In your report, discuss how the trends in the Effective Federal Funds Rate compare with trends in inflation. If you took out a loan to pay for your "big-ticket" purchase, what was the interest rate on your loan? Were interest rates rising or falling at that time? Were interest rates relatively high or low at that time? You are also encouraged to include graphs of these statistics in your report.
  • Discuss the influence of any Federal government or state government programs, such as tax credits or tax deductions for energy-saving/efficiency purchases, on your decision to make your last big purchase; or if government incentives did not factor into your decision, explain why not.
  • Develop conclusions about the economy's influence on personal and business decision-making relative to purchases of big-ticket items, investments, or other major purchases.

Cite a minimum of three peer-reviewed sources. Note: The Federal Reserve of St. Louis, the Bureau of Economic Analysis, and the Bureau of Labor Statistics can be cited to fulfill this requirement.

Format your paper consistent with APA guidelines.

Submit your assignment. Be sure you submit your paper as well as the two required Excel® files..

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Explanation & Answer

Attached.

Running head; INFLUENCE OF ECONOMICS ON HOUSEHOLD DECISION MAKING

Influence of Economics on Household Decision Making
Students’ name
Institution
Date

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INFLUENCE OF ECONOMICS ON HOUSEHOLD DECISION MAKING

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Influence of Economics on Household Decision Making
Gross Domestic Product (GDP) is a primary indicator important to a country, and it is
used to measure the health economy in a state. It estimates the total monetary value of the final
goods produced and services offered within a country in a period. GPD calculated annually, but
for analysis, it measured and calculated on quarterly, monthly or sometimes daily. It is referred
to as the size of the economy in a country, and it shows a comparison to the last quarter or year.
The main features of Gross Domestic Product (GDP) within a state involves public and private
consumptions, investments, government's projects and investments, and country exports. Imports
not regarded as part of the GDP. In general Gross Domestic Product (GDP) estimates the mean
of the total economy of a country or a particular region. It is a gauge for the size of the economy
(Frederiks et al, 2015).
Personal consumption expenditure known as PCE index, it measures the changing in
prices of goods consumed and services rendered within a country or a particular region.
Payments are involved in the Personal consumption expenditure index are actual expenses linked
to households in the United States (Frederiks et al, 2015). It measures the data of durable and
non-durable services. Personal consumption expenditure index is a reliable and good predicting
indicator to measure the stability of the economy in a given country or a particular region.
Analysts widely prefer this technique as a tool to measure the total economic progress of a
specified state or territory. According to (Federal Reserve Bank of St. Louis, 10-Year Breakeven
Inflation Rate)

INFLUENCE OF ECONOMICS ON HOUSEHOLD DECISION MAKING

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The GDP of the United States has gauged for the last ten years. The graph is shown below,
shows the trend from 2008 to 2018. (Source Federal Reserve of St. Louis's FRED web site)
(Units in billions)

Frequency: Annual GDP
19000.000
18500.000
18000.000

17500.000
17000.000
16500.000

16000.000
15500.000
15000.000

The United States has shown growth over the last ten years. Compare from 2008 to 2018; there
is a significant increase in economic growth. From the graph, the economy of the country
crushed in 2008 and 2009 it was negative. Looking at the other years after 2009 the average GDP
was at 2.2 %. (Units a...


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