Economic Choice and Economic Decision Making, economics homework help
your last vehicle purchase and the decision making process you engaged
in while deciding what vehicle to purchase or if a new vehicle was the
right decision. While analyzing your decision, keep in mind that
everything from the interest rates to the price of gasoline is driven by
the economy in one way or another.
Develop a 1,400-word analysis of your decision-making process in which you include the following:
- Discuss the role of the interest rate and the cost of financing on
your purchase decision. Interest rates are derived from the supply and
demand for money and the actions of the Federal Reserve System. What was
the rate of interest you paid on your vehicle loan? Were interest rates
rising or falling at the time of your decision?
- Examine the influence of gasoline prices on the choice of vehicle you selected.
Gasoline prices rise and fall dramatically based on economic supply of
and demand for crude oil. When gasoline prices are low, Americans buy
larger, heavier autos, SUV’s and pick-up trucks. When gas prices are
high, Americans purchase more compact and fuel efficient vehicles. When
you purchased your last vehicle, were crude oil and gasoline prices
rising or falling?
- Discuss the following in regard to your household at the time of your purchase:
- Were you employed? (Las Vegas Hotel and Casinos)
- Was the economy growing or contracting (recession)?
- If you were employed, did you take into consideration the risk that
you might lose your job if a recession occurred during the period of
your loan pay-back?
A basic assumption of consumers making
purchases of large items requiring financing is that their household
cash flow will be adequate to cover the monthly loan payments. For most
Americans, this also means assuming continuation of their present wages.
But many jobs are sensitive to rises and falls in the business cycle,
as witnessed by the 10% unemployment rate of the past “Great Recession.”
Evaluate the financial
trade-offs made when making your purchase. This includes lower
maintenance costs for a newer vehicle versus a car payment and higher
insurance among other factors.
- Discuss the influence of any of these Federal or state level
programs on your decision to purchase a vehicle; or if these did not
factor into your decision, explain why or why not:
- Buying fuel efficient vehicles such as Flex fuel, hybrids and electrics
- Converting existing vehicles to use alternative fuels (Flex fuel)
- Removing old, fuel inefficient, and high polluting vehicles from the highways
- Explain the influence of environmental factors such as emissions and health concerns on your decision.
- Discuss the ways in which your purchase illustrates one piece of the
circular flow model of economic activity. What are the other parts?
- Develop conclusions about the economy’s influence on personal and
business decision making such as purchases, investments, and so forth.
Cite a minimum of three peer reviewed sources.
Format your paper consistent with APA guidelines.
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