Influence of Economics on Household Decision Making

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. 

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