Influence of Economics on Household Decision Making

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Wenzverm82

Economics

Description

NO PLAGIARISM... MUST BE ORIGINAL WORK

This is a 2 part assignment.

1ST part requires you to retrieve statics information and post it on an Excel work sheet

2nd part requires you to develop a 1050 word report answering all questions on all bullet points

Must include 3 peer reviewed sources as references

Must include 1 in text citation

Paper and references must be in APA Format

Feel free to use graphs and charts

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.

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Explanation & Answer

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Running head: DECISION MAKING PROCESS

Decision Making Process
Name
University Name
Course
Dec 07, 2017

1

DECISION MAKING PROCESS

2
Introduction

The main aim of the paper is to determine the effect of macroeconomic indicators on
individual’s decision-making process.When an individual purchase goods or services, it is
affected by both macroeconomic and macroeconomic factors. The microeconomic factors
include the demand for a given product, local conditions, and type of companies. The
macroeconomic factors that influence individual decision-making process are the inflation
rate, GDP of the economy and Real Personal Consumption Expenditure. Thus, individual’s
decision to make a purchase is significantly affected by both macroeconomic and
macroeconomic factors.
Impact of Macroeconomic Factors
It is common for individuals that they wait for the right time and opportunity for
making purchasing decision so that the products can be obtained with the best offer available
and with minimal price. For example, the business manager decides to increase sales by
launching discount offers on the sale of products. It is a win-win situation for both company
and individuals as both are benefitted.However, psychographic and demographic factors also
influence individual’s decision-making process. For example, the best time and day to
purchase the goods, gender, and race of the individual. Recently, I bought a new car with a
downpayment of $2000.I approached the bank for a loan, and the US bank sanctioned it.I
bought my new car in August (2012).August is the best month for the purchase of the new car
as dealers are under pressure of clearing the unsold car from the inventory because they start
receiving shipments of next year’s model. Further, the company also offers lower interest rate
along with gift and coupons. The macroeconomic factors like GDP, Real PCE, Effective
Federal Fund Rate and the Consumer Price Index played a significant role in the purchase of
my car.

DECISION MAKING PROCESS

3
GDP and Real PCE

The health of the economy is measured by the GDP of the country which is the total
sum dollar value of goods and services produced within a specified period.US economy is
one of the largest economy of the world. A line chart is d...


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