Reference no: EM133792461

Examining the Effects of Inflation, Globalization, Outsourcing of Production, and Consumer Buying Behavior

ECON 201-Introduction to Macroeconomic Principles is a general education course designed to assist students in the development of critical life skills. One of the goals of this assignment is to assess student competence for each of these objectives:
Written and Oral Communication-Explain the economic rationale for international trade in terms of division of labor and comparative advantage (CCO12)
Critical Analysis and Reasoning-Apply economic principles in the analysis of at least one contemporary macroeconomic issue (CCO14)
Information Literacy- find, evaluate, use, and cite appropriate academic sources related to macroeconomics (CCO16)
Scientific and Quantitative or Logical Reasoning-Interpret quantitative data presented in graphs and tables (CCO3)
Personal and Professional Ethics- explain the ethics of allocating scarce resources in a mixed economy (CCO5)

In addition to the general education objectives listed above, this assignment assesses students' understanding and application of the following skills and knowledge specific to ECON 201:
Effects of the global economy and outsourcing of production on inflation and consumer buying behavior
Impact of online shopping on inflation and consumer buying behavior

ASSIGNMENT:
Students interview a person 20yrs their senior about prices of common goods or services and compare those costs to their own experiences. Students illustrate the price changes as they relate to wages. Students explore the typical US standard of living over time.
Purpose: Students apply economic principles to their own lives. In this activity students learn how to effectively evaluate percentage change over time and the influence of inflation to the economy.
Audience: Course Instructor
Directions: Students will conduct an interview to determine differences in the relative costs of goods or services between the current economy and that of 20yrs ago. Calculations with respect to changes over time will be completed and an analysis of the impacts of those changes as relates to macroeconomic economic principles and the application of those principles and observations to the student's life experiences will be made.

APA 7 student style format and documentation for parenthetical citations and a References page.

Step 1:
Interview a person who is at least 20 years older than you are and who was, back when they were your age, in a similar economic situation as you are now. In this context, "similar" means the following:
About the same general characteristics, in terms of gender, ethnicity, family status.
About the same workplace skills, talents, and educational qualifications.
Comparable type of work by reference to skill/educational/talent requirements, place in the managerial hierarchy, etc.
Comparable life styles-e.g., part-time worker, part-time student, and/or whatever else you consider
important in your particular situation.
In the interview, you will determine at least 5 items that both of you purchase(d) regularly and of which they can recall the cost of in general.

In the event that you, yourself do not work-or not work enough for you to cover a significant portion of your current expenses-you should substitute the person who is your principal supporter (e.g., a parent) and interview her/him, along with a person at least 20 years older, etc. (see above) as the "other pole" of your comparisons. In any case, you should be sure to obtain two comparable individual situations, separated by at least 20 years.

Begin by finding out the (after tax and other withholdings) hourly wage earnings each person (that is, yourself or the substitute financial supporter, on the one end, and the older person who was in a similar situation to you/your substitute two or more decades ago). In the event the wage information is in annual rather than hourly terms, you should convert by dividing that figure (again, net of taxes and other withholdings) by the approximate number of hours of work per year involved in that earner's workload.

Step 2:
Next, find the prices of at least five items then (that is, in the recollection of the older person) and now (that is in your own-or your substitute's-situation). Examples are:
The cost of filling up the car (but how would you deal with the possibility that the cars in your comparison may be markedly different in size, efficiency, etc.?)
The expense of an evening out with a date (again, are there noteworthy differences in what dating entailed back then and now?)
The weekly food bill of the individual or household (here it is important that you try to compare similar numbers/ages of those who are being fed-but do keep an eye open for other changes in the nature of the "food baskets" you are comparing over time)
The replacement cost of the user's main television set or home computer (here you may face some serious challenges adjusting for product quality change as well as consumer viewing habits!)
The cost of replacing the car each person is/was using (have consumer choices changed here? How about car performance standards?)
The cost of an everyday clothing outfit (and here, too, there may be noteworthy changes in what such an outfit consists of)
The cost of tuition for a class at this or a comparable educational institution
[For your information, in 1981, tuition in Baltimore County's community colleges was $10 per credit (no technology fees, back then)]

Avoid multiple items that belong to the same category and therefore tend to shadow one another in price trends and consumer choices. For example, if you consider the cost of a medical check-up, there is little point also including the cost of health insurance. Since these both are influenced by fairly similar economic factors, the data that you are likely to gather for each will tend to be multiples of each other. And, by the time you have calculated the percent changes in each item, you will probably discover that your results are nearly identical. It would therefore be preferable to vary your "basket" of items so as to account for distinct trends in quantity, price, and qualitative change over time.

Step 3:
Organize the price data in a table, where you show the cost of each item then and now, divided by the corresponding wage rate. The result will be a list of "real prices" (with hours of work put in as the price deflator).

For example, the data cited in the last bullet, above, would show that it took 1.94 hours of work at minimum wage rates to pay for one college credit (this would make the real price of a 3-credit course about 6 hours).
How many hours do you have to put in to pay for a 3-credit class today?
To make your data-crunching easier to follow, please complete the table by showing the percent over-time change in real prices.

Step 4:
After completing your table, conclude by writing a short commentary (a minimum of 3 pages, double spaced, using a Times New Roman 12 point font and 1 inch margins), remarking on what you've learned from your findings.
Include a brief description of the situations of the persons you compared:
Do these situations reflect some significant kinds of change in our society's available opportunities for people like the ones you are comparing over time?
Do you see any evidence that people's working and spending habits have changed in response to rising or falling real costs?
Do people select the type of car they own according to fuel efficiency, in reaction to (real) fuel prices?
Describe how the advent of globalization and the outsourcing of production have affected purchasing decisions, including how the goods are purchased and the cost of the purchases.
Should consumers be willing to pay more for goods made in America to support keeping jobs in this country? Why or why not?

Research will be required for this project. Include a minimum of three additional scholarly or peer-reviewed secondary sources using the library databases to inform your commentary. Properly formatted APA 7 student style parenthetical citations and References page is required (this is in addition to the three page commentary and data table).

APA 7 student style format and documentation for parenthetical citations and a References page.