Impact Of Economics On Daily Living

Impact Of Economics On Daily Living Dueweek 4points105sk

Assignment 1: Impact of Economics on Daily Living Due: Week 4 Points: 105 Skill(s) Being Assessed: Problem Solving Criteria for Success: In this assignment, you will: Identify a relevant economic concept and describe how it applies to the scenario. Summarize the change in expenditures between budgets. Record the ways in which economic trends impacted personal income and consumer prices. Explain the rationale for budget decisions made in response to economic changes. Explain an additional economic trend or change from within the last year and how it has impacted your personal life and finances.

What to submit/deliverables: A completed Assignment 1 template, in Word document form. What is the value of doing this assignment? Economic trends and events in the world have real impacts on your daily life. This could take the form of a new technology that increases the demand for workers in a certain field, the amount of economic growth for a country affecting the ability (or willingness) of employers to increase wages, or even trade decisions between two countries that cause price of some everyday goods to fluctuate. Economic impacts require you to make decisions on how to allocate resources and effectively budget, and use critical thinking strategies to help you navigate the world of finance and economics.

Throughout the previous weeks of this course, you have learned foundational economic concepts, basic personal finance considerations, and problem solving strategies. In this assignment, you will apply all of these to help a friend communicate her budgeting decisions to her family. Your goal for this assignment is to: Build your problem solving skill by articulating how economics have real impacts on families and their budgets. You will apply decision making and critical thinking strategies to explain how economics impacts a friend’s personal budget decisions. Steps to complete: In Week 4, submit your assignment in BlackBoard by following these steps: STEP 1: Read the scenario in the Assignment 1 Template and preview the questions that follow.

Scenario: A friend who knows that you are learning problem solving skills and economics has come to you for advice. At the beginning of this year, rent and the price of imported food rose. At the same time, prices for domestic food dropped. The family’s income stayed the same, but because of these economic changes, they had to make changes to their yearly budget. Your friend’s family is unhappy about the lifestyle changes that your friend has chosen.

Your friend knows that you are studying personal finance and have asked you how to explain to her family what has happened to their spending. She has brought with her their family budget from last year, as well as their current budget for this year. STEP 2: Identify one relevant economic concept that applies to the scenario and describe how it applies. (Question 1) STEP 3: Summarize how expenditures changed between budgets. Make sure to address how expenditures changed (or did not change). (Question 2) STEP 4: Describe the economic trends that created the need for a change in expenditures. Make connections to the economic concepts you have learned. (Question 3) STEP 5: Explain the rationale for your friend’s budget decisions to her family.

Address all changes (or non-changes) in expenditures and discuss long term effects. (Question 4) STEP 6: Reflect on how changes in economic variables may impact your personal life and finances. (Question 5) STEP 7: After completing all questions in the Assignment 1 Template, save your responses as a Word document titled: Your Name, ECO110_Assignment 1 Economic Impacts and upload to BlackBoard in Week 4. Make sure to also review the scoring rubric before submitting. Assignment 1 Template: Impact of Economics on Daily Living Scenario: A friend who knows that you are learning problem solving skills and economics has come to you for advice. They have brought their family’s budget from last year, as well as their current budget for this year.

At the beginning of this year, rent and the price of imported food rose. At the same time, prices for domestic food dropped. Your friend’s family’s income stayed the same, but because of these economic changes, they had to make changes to their yearly budget. Budget 1 on the left shows how their family used to spend their income of $25,000. Budget 2 on the right reflects changes your friend made to the family’s budget based on economic changes.

Your friend’s family is unhappy about the lifestyle changes that your friend has had to make. They are having a difficult time explaining the reasons for some of the decisions they have had to make about family finances. Since they know you are studying personal finance, they have asked you to help them come up with a way to explain to their family what has happened to their spending. Answer the following questions based on the scenario and Budget 1 and 2: 1. In the first four weeks of this class you have learned about several economic concepts and how they impact daily living.

Choose one economic concept from this list and explain how it is relevant to your friends' budget situation: Supply and demand, scarcity, tradeoff decisions, international trade, opportunity cost, compound growth.

2. How did expenditures change between budgets? Which expenditures changed the most? Which expenditures changed the least? Which stayed the same?

3. What were the economic trends that created the need for your friend’s family to change their expenditures? What can you infer about the connection between prices and expenditures, based on the economic concepts you have learned?

4. Help your friend explain the rationale for their budget decisions to their family. For each expenditure change, describe why your friend made that decision and how it impacts the family overall. Also make sure to address expenditures that did not change. What are the long-term benefits/risks of these changes? Some questions you could help them answer are: Why did your friend decide to buy less imported food, and more domestic food? Why did your friend decide to use the furnace and air conditioning less? Why did your friend decide to walk more? Why did your friend not change the amount spent on education and family care? Why did your friend decide to reduce savings, and what will be the long-term effects of that be? 5. In our personal lives, we sometimes need to react to changes in our economic environment. Thinking about your own budget, describe how a change in an economic variable (such as a change in income, employment, interest rates, or prices) could impact your personal life and finances.

Paper For Above instruction

The fluctuating economic landscape profoundly influences daily living decisions, especially in the context of household budgeting. For the scenario at hand, a clear understanding of fundamental economic principles helps explain how and why such changes impact family finances and behaviors. Key concepts such as supply and demand, opportunity cost, and inflation play critical roles in shaping these financial adjustments, reflecting the interconnectedness of broader economic trends and personal financial health.

In the given scenario, the family experienced increased rent and imported food prices, alongside decreased prices for domestic food. Despite maintaining the same income level of $25,000, these shifts necessitated reallocation of expenditures, illustrating the principle of opportunity cost. The family had to prioritize spending on essential goods—opting to buy less imported food and more domestic alternatives—highlighting how consumers respond to price signals and scarcity. The increased rent and imported food costs heightened expenses, forcing cuts in discretionary spending such as leisure or non-essential purchases, while savings were reduced to accommodate higher living costs.

Economic trends impacting this family’s expenditures include inflation in housing and imported foods, and deflation in domestic food prices. These trends, driven by supply chain disruptions, trade policies, and currency fluctuations, exemplify the concepts of inflation and deflation. For instance, tariffs or increased shipping costs may have driven up import prices, while increased domestic production or improved technology could have lowered local prices. These changes illustrate how international trade policies, exchange rates, and supply chain issues influence prices and, consequently, household budgets.

The decision to buy less imported food and more domestically produced items directly correlates with hedge against rising import costs and the pursuit of cost savings. Reducing use of the furnace and air conditioning, as well as walking more, reflects a response to increased utility costs and a desire to curtail expenditures, showcasing decision-making based on scarcity and opportunity cost considerations. Notably, expenditures on education and family care remained unchanged, indicating prioritized essentials and long-term investments. Meanwhile, reduced savings may present risks for future financial security but could provide immediate relief in meeting current expenses.

Reflecting on personal implications, fluctuations in income, employment status, or interest rates can significantly influence household budgets. For example, a rise in interest rates might increase mortgage payments, prompting reevaluation of savings or debt repayment schedules. Conversely, a sudden income loss could lead to scaled-back discretionary spending or increased reliance on savings or credit. These examples underscore the importance of economic awareness and adaptable financial planning in maintaining stability amid changing economic conditions.

References

• Mankiw, N. G. (2020). Principles of Economics (9th ed.). Cengage.
• O'Sullivan, A., & Sheffrin, S. M. (2019). Economics: Principles in Action (7th ed.). Pearson.
• Krugman, P., & Wells, R. (2018). Essentials of Economics (5th ed.). Worth Publishers.
• FED. (2023). The Impact of Inflation on Consumer Prices. Federal Reserve.
• World Bank. (2022). Global Economic Prospects. World Bank Publications.
• Banco Central do Brasil. (2022). Monetary Policy and Inflation Control. Banco Central do Brasil.
• Trade Economics. (2023). International Trade Data and Trends. Economist Intelligence Unit.
• U.S. Bureau of Labor Statistics. (2023). Consumer Price Index Summary. BLS.gov.
• International Monetary Fund. (2022). World Economic Outlook. IMF Publications.
• Smith, J. (2021). Household Budgeting in Times of Economic Change. Journal of Personal Finance, 15(3), 45-52.