Assessment 1 Instructions: Impact of Economics on Daily Living
Paper details:
Adjust your family’s yearly budget to accommodate changes in income and expenditures. Apply what you have learned to discuss economic trends that affected budgetary changes and explain why you made certain budget decisions.
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 other resources every day. In fact, everything we do—from the choices we make about our careers to how much we spend and save—is influenced by the economy. Understanding the science of economics can give us the confidence to navigate our personal financial future.
In this course, you will be introduced to the basic concepts of economics and explore the essential skills that will help you ensure your personal, professional, and financial well-being. We’ll also discuss what it means 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, CEO, Berkshire Hathaway
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 today’s world, every aspect of our daily lives is affected by economics. Simply put, economics is the study of how humankind uses its limited resources, such as time, money, goods, and services. Understanding these resources is not only the key to business success, it’s critical to your personal financial success.
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 assessments, 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 lot more enjoyable. Whether funding 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 price of groceries or 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 is by understanding and navigating our income. Additionally, by learning how to understand and think critically about economic trends, you can better predict which expenses are likely to increase. Even if you cannot control the trends, by having a sense of what’s 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 look ahead and maintain flexibility so you can make the best financial decisions for your future.
Overview
Economic trends and world events have real impacts on your daily life: a new technology may increase the demand for workers in a certain field, the amount of economic growth for a country can affect the ability or willingness of employers to increase wages, or trade decisions between two countries could cause prices of everyday goods to fluctuate.
Economic impacts require you to decide 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 budgeting scenario.
Your goal for this assessment is to build your problem-solving skill by articulating how economics have real effects on families and their budgets. You will apply decision-making and critical-thinking strategies to explain how economics can inform personal budget decisions.
Preparation
Your assessment should incorporate online research from these resources and/or other resources of your choice. Note that you must use the Capella University Library databases to find at least one resource.
Federal Student Aid. (2021). Parents of students. https://studentaid.gov/resources/prepare-for-college/parents
FAFSA offers resources to help parents and students understand how aid is calculated, information on various loan types, and more. Explore the checklist for pre-college planning in particular.
Nerd Wallet. (2021). https://www.nerdwallet.com/
This resource does the research for you: they’ve aggregated information on credit cards, personal loans, and student loans, making this a one-stop shop for you to compare financial products. Use Nerdwallet.com to consider the implications of taking out a loan.
Explore various financial calculators and other resources of your choice. Make sure each website is a credible source.
Incorporate your observations and results from these online resources into your write-ups.
Read the following scenario for the assessment context. Read the Assessment 1 Template [DOCX]; the completed template will be your deliverable for this assessment. Make sure you are providing at least one 4–7 sentence paragraph per section.
Scenario
Your child is starting a two-year culinary program at the community college this year and was awarded a small grant to cover some of the cost. You need to adjust your budget to help them with tuition and other expenses, as well as consider and project future economic trends. At the beginning of this year, the cost of housing rose, as there were more renters than rental units. Trade decisions have made some imported items more expensive than they were last year. The family’s income changed slightly, but because of these economic changes, you will need to modify the yearly budget. You must analyze spending in the prior year and the budget for this year. Your family might be unhappy with some of your decisions about where to spend less or more, so you must be prepared to explain your choices to them.
Instructions
For this assessment, complete the following steps:
Describe how a relevant economic concept applies to a scenario.
Review the scenario for at least one economic concept and describe how it applies to the scenario.
Summarize the change in expenditures between budgets.
Review the two budgets in the Assessment 1 Template [DOCX]. Summarize what did and did not change in the second budget.
Describe the economic trends that created the need for a change in expenditures.
Think about the economic trends that prompted the budget decisions you made. Make connections to the economic concepts you have learned.
Provide a rationale for the budget decisions made in response to economic changes.
Explain your budget decisions to the family. Address all changes in expenditures and why you made no changes to other budget items, discussing long-term implications.
Reflect on how changes in economic variables may impact one’s personal life and finances.
Think about how changes in the economy have affected or are currently affecting your personal life and finances.
Address all components of prompt and use the assessment descriiption to structure text.
Review your assessment to ensure that you meet all criteria.
Additional 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. Your writing must be free of errors that detract from the overall message.
Font and font size: Times New Roman, 12 points.
Sources: Two sources are required. One of these sources may 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 scoring guide 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 to modify the budget.
Reflect on ways in which changes in economic variables may affect 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 all changes in budget expenditures.
Provide a 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 descriiption to structure text.
