Impact of Economics on Daily Living

                                     Complete template that is attached please

Adjust your family’s yearly budget to accommodate changes in income and expenditures. Apply what you have learned about personal finance and economic trends to discuss the trends that impacted some of the changes between the two budgets and to explain to your family why certain budget decisions were made.

Introduction

What Is Economics?

What does the price of bread have to do with international relations? How do you know if it’s the right time to buy a new computer or look for a new job? Should you save your holiday bonus or spend it?

The study of economics helps you answer these questions and more by examining how society produces, consumes, and exchanges wealth and resources every day. In fact, everything we do—from the choices we make about our careers to the cost of living and how much we’re able to spend and save—is influenced by the economy. And understanding the science of economics can give us the confidence to navigate our personal financial future.

In this course, we will introduce you to the basic concepts of economics and explore the essential skills that will help you improve your personal, professional, and financial well-being. We’ll also discuss what it means for you to invest in your most valuable resource—you.

Economics, Personal Finance and Essential Employability Skills

Ultimately, there’s one investment that supersedes all others: Invest in yourself.

– Warren Buffett, Billionaire CEO

When we think of economics, it’s easy to imagine investors trading stocks on Wall Street or international companies battling over supply and demand. But, in the modern world, economics affects every aspect of our daily lives. Simply put, economics is the study of how humankind uses its limited resources (such as time, money, goods, and services). And understanding these resources is not only the key to business success, it’s critical to your personal financial success as well.

Every day, you make decisions that affect your personal financial future. You decide how to spend your time and money, which career to pursue, and how to grow the skills and experience you need to be professionally successful. In other words, you’re deciding how to allocate your personal resources to best support yourself and your family. When we think of our personal resources, it’s easy to forget that your most valuable resource is actually yourself. The more skills and knowledge you have, the more valuable you become to future employers. You’ve already started investing in yourself by committing to your education here at Capella. And, over the next four assessment, you’ll not only gain a better understanding of economics and personal finance, you’ll practice four of the essential employability skills that will help you invest in yourself and your future. They are:

Problem solving to find creative, effective, ethical, and evidence-based solutions to economic and financial challenges.

Productivity to plan and organize your finances as new priorities and needs emerge.

Technology to complete tasks and goals, communicate complex financial data effectively, and stay competitive.

Agility to embrace change and adapt so you can achieve the results you desire.

Putting a Price on Success

Money won’t make you happy on its own, but having the knowledge you need to take control of your personal finances will make your life a whole lot more enjoyable. Whether it’s affording your own education or saving to pay for your children’s, empowering yourself to achieve your personal and professional goals means thinking critically about your economic resources and making smart decisions for the future.

You can use your problem-solving skill to apply critical thinking strategies to make informed decisions about your personal finances. Also, you can apply the agility skill to adapt to changing economic trends. So even if money can’t buy happiness, you’ll have a solid plan in place to reach your own budgetary bliss.

Earning Your Future

There are many things in our financial lives we can’t control. We can’t control the prices of goods such as groceries or the rising cost of housing. We can’t control how much a company can afford to pay us to perform our job duties. But there are ways we can take control of our personal finances to earn the future we deserve. One of the best ways to do this is by understanding and navigating our income. Additionally, by learning how to understand and think critically about economic trends, you can better predict where certain areas of your expenses are likely to increase. Even if you cannot control the trends, by having an idea of what is coming, you can better prepare yourself for changes in costs.

You can apply both the problem-solving and agility skills when planning and managing your income. This will help you to both look ahead and stay flexible so you can make the best financial decisions for your future.

Overview

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. In this assessment, you will apply what have learned of foundational economic concepts, basic personal finance considerations, and problem-solving strategies to a hypothetical budgeting scenario.

Your goal for this assessment 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 hypothetical personal budget decisions.

Preparation

Read the scenario below to understand the context for this assessment. Review the Assessment 1 Template [DOCX]. This completed template will be your deliverable for this assessment. Make sure you are providing at least one paragraph (4–7 sentences) per section.

Scenario

Your child is starting a two-year culinary program at community college this year and was awarded a small grant to cover some of the cost. You need to adjust your budget for this additional expense, as well as consider and project future economic trends. At the beginning of this year, the cost of housing, for example, rose as there were more renters than rental units. Additionally, certain trade decisions have made some imported items more expensive than the previous year. The family’s income changed slightly, but because of these economic changes, you will need to make changes to the yearly budget. You will need to analyze spending in the prior year and the current budget for this year. Your family might not be happy with some of your decisions about where to spend less or where to spend more. So, you also need to be prepared to explain the reasoning for your decisions to them.

Instructions

For this assessment, complete the following steps:

Step 1: Review the scenario for at least one economic concept and describe how it applies to the scenario.

Scoring guide criteria: Describe how a relevant economic concept applies to a scenario.

Step 2: Review the two budgets in the Assessment 1 Template [DOCX]. Prepare a summary of what did and did not change between the two budgets.

Scoring guide criteria: Summarize the change in expenditures between budgets.

Step 3: Think about the economic trends that created the need for you to make the budget decisions that you did. Make connections to the economic concepts you have learned.

Scoring guide criteria: Describe the economic trends that created the need for a change in expenditures.

Step 4: Explain the rationale for the budget decisions to the family. Address all changes (or non-changes) in expenditures and discuss long-term effects.

Scoring guide criteria: Explain the rationale for budget decisions made in response to economic changes.

Step 5: Think about how changes in the economy has previously impacted, or currently is impacting, your personal life and finances.

Scoring guide criteria: Reflect on how changes in economic variables may impact one’s personal life and finances.

Step 6: Review your assessment to ensure your written responses are addressing all aspects of the template prompts and are well and clearly written.

Scoring guide criteria: Address all components of prompt and use the assessment description to structure text.

Additional Requirements

Your assessment should also follow the following requirements:

Written communication: Communicate in a manner that is scholarly, professional, respectful, and consistent with expectations for professional practice in education. Original work and critical thinking are required regarding your assessment and scholarly writing. Your writing must be free of errors that detract from the overall message.

Font and font size: Times New Roman, 12 point.

Sources: Two sources are required. One of these sources can be one of the course readings or videos. The second source must be obtained from the Capella University Library databases.

Competencies Measured

By successfully completing this assessment, you will demonstrate your proficiency in the following course competencies and assessment criteria:

Competency 1: Explain how economic principles impact aspects of personal and professional life.

Describe how a relevant economic concept applies to a scenario.

Describe the economic trends that created the need for a change in expenditures.

Reflect on how changes in economic variables may impact one’s personal life and finances.

Competency 2: Develop financial plans to manage budgets and economic goals, while considering economic drivers, necessary resources, and uncertainty.

Summarize the change in expenditures between budgets.

Explain the rationale for budget decisions made in response to economic changes.

Competency 5: Develop professional written communication in a well-organized text, incorporating appropriate evidence and tone in grammatically sound sentences.

Address all components of prompt and use the assessment description to structure text.

Scenario

Your child is starting a two-year culinary program at community college this year and was awarded a small grant to cover some of the cost. You need to adjust your budget for this additional expense, as well as consider and project future economic trends. At the beginning of this year, the cost of housing for example rose as there were more renters than rental units. Additionally, certain trade decisions have made some imported item more expensive than the previous year. The family’s income changed slightly, but because of these economic changes, will need to make changes to the yearly budget. You will need to analyze spending in the prior year (Budget 1) and the current budget (Budget 2) for this year. Your family might not be happy with some of your decisions about where to spend less or where to spend more. So, you also need to be prepared to explain the reasoning for your decisions to them.

Budget 1

 Dollars ($)Percent (%)
Income50,000100
Expenditures  
Housing8,50017.0
Food5,50011.0
Utilities5,00010.0
Transportation7,00014.0
Taxes6,00012.0
Debt Payments or Savings5,50011.0
Soc. Security, Personal Ins., 401k5,00010.0
Health Care2,5005.0
Entertainment2,0004.0
Apparel1,4002.8
Misc1,0002.0
Personal Care6001.2
Total50,000100

Budget 2

 Dollars ($)Percent (%)
Income51,000100
Expenditures  
Housing10,00019.6
Food5,30010.4
Utilities5,10010.0
Transportation7,00013.7
Taxes5,80011.4
Debt Payments or Savings4,9009.6
Soc. Security, Personal Ins., 401k5,0009.8
Health Care2,6005.1
Entertainment1,1002.2
Apparel9001.8
Misc7001.3
Personal Care6001.2
Education2,0003.9
Total25,000100

Questions

  1. You have learned about economic concepts such as supply and demand, scarcity, tradeoff decisions, international trade, opportunity cost, and compound growth. Think about the economic concepts you encountered in the resources for this assessment, or those you know about from previously learning or research. These could include concepts such as supply and demand, scarcity, tradeoff decisions, inflation, and opportunity costs. Choose at least one economic concept and describe how it is relevant to the scenario and your two budgets.

[Write your response to question 1 here.]

  • How did expenditures change between budgets? Which expenditures changed the most? Which expenditures changed the least? Which stayed the same? Summarize the change in expenditures between budgets.

[Write your response to question 2 here.]

  • What were the economic trends that created the need for your family to change their expenditures? What can you infer about the connection between prices and expenditures, based on the economic concepts you have learned? Describe the economic trends that created the need for a change in expenditures.

[Write your response to question 3 here.]

  • Think of a way to explain the rationale for your budget decisions to your family. Some questions you could think about to help create your explanation are:
  • Why did you decide to buy less food?
  • Why did your housing costs increase?
  • Why did you decide to cut the most from entertainment and apparel?
  • Why couldn’t you change the amount you spent on transportation (this likely includes your car payment)?
    • What other areas had to remain the same?
  • Why did you decide to reduce the amount that you paid towards existing debt or put into savings, and what will the long-term effects of that be?

[Write your response to question 4 here.]

  • 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) from within the last year either has impacted or could impact your personal life and finances. If the trend continues over the next year or two, what predictions could you make about further impacts to your personal life and finances?

[Write your response to question 5 here.]

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