ECON 201.edited

1 ECON 201: Introduction to Macroeconomics Principles Student Name Course Name Instructor Institution Date

2 ECON 201: Introduction to Macroeconomics Principles After interviewing with someone 20 years older than me, I gained a perspective on how prices have changed over time. In the table below, I have compared the prices of five common goods and services between the time of the senior person and my current situation. Money Prices Price per hours Change Item Now Then Now Then Absolute Per cent A B C D E F G Assume the wage now is $15.00 Assume the wage then was $3.00 a. Filling up car $6 per gallon $2 per gallon 0.4 ($6/$15=0.4) 0.7 ($2/$3=0.7) 0.3 42 10 gallons 4 gallons b. Car tank capacity (lasts for three days, driving locally) $60 $8 4.0 ($60/$15 = 4.0) 2.7 ($8/$3.0= 2.7) 1.3 48 (1.3/2.7 x100 = = 48) b. Movie ticket (one day) $12 $5 0.8 ($12/$15 = 0.8) 1.7 ($5/$3 = 1.7) 1.1 64(1.1/1.7 x 100=

4 at a retail store while pursuing my degree. I reside with my parents and depend on my part-time job to cover my expenses, including tuition fees. Do these situations reflect some kind of change in our society's available opportunities for people like the ones you are comparing over time? In comparing the prices of common goods and services between our two situations, as illustrated in the table above, it is clear that there has been a considerable rise in the costs in the last 20 years. The changes have been linked to different societal factors, like changes in minimum wage inflation, and globalisation's impacts (West & Williams, 2017). One notable change which has impacted society is the increase in demand for some products and services. For instance, with technological advancements, individuals are currently dependent on cars for transportation, resulting in a greater demand for gasoline. The situation has driven the cost of filling up a car from $2 to $6 per gallon. The trend is also evident in the increase in the cost of food because more people eat out and buy convenience foods because of busy lifestyles. Additionally, society's accessible opportunities for people such as John and me have likewise changed. With the introduction of new technologies besides systems, there are more job opportunities in domains like technology and ecommerce (Loxton et al., 2020). Nonetheless, this has led to a decrease in some traditional jobs like manufacturing. 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?

5 Since the prices of goods and services have increased, people’s working and spending behaviours and habits have changed significantly. Consequently, due to the increasing costs, individuals have had to adjust their budgets besides prioritize their expenses. John recalled a time when he could go to dinner with friends at least once a week. Nonetheless, in the latest situation, he has to be careful with how he spends. The increasing costs have impacted individuals' purchasing decisions (Giroud & Mueller, 2017). One apparent case is the type of car individuals own. With the rise in gasoline prices, consumers are more likely to select fuel-efficient cars. John mentioned that he recently bought a hybrid vehicle to save on fuel expenses compared to his previous vehicle, which was not fuel-efficient. As a campus student, I likewise consider the cost of fuel when looking for a car because it directly influences my budget. It demonstrates that consumers' spending habits, and choices, are consistently changing in response to costs and situations. Describe how the advent of globalization and the outsourcing of production have affected purchasing decisions, including how goods are purchased and the cost of the purchases. The advent of globalization and the outsourcing of production has also had a considerable effect on purchasing choices and costs. With the growth of international trade, products across the globe are accessible in the United States, frequently at reduced prices because of the lower production costs in other nations. It has resulted in a change in consumer behaviour, with individuals being more likely to buy products from other nations, particularly while considering the cost. For instance, John said he currently buys clothing besides household goods from online retailers and usually finds better deals from global sellers. The trend has changed the manner individuals buy and has had an impact on the cost of goods.

7 References Giroud, X., & Mueller, H. M. (2017). Firm leverage, consumer demand, and employment losses during the great recession. The Quarterly Journal of Economics , 132(1), 271-316. https://academic.oup.com/qje/article-abstract/132/1/271/2724544 . Loxton, M., Truskett, R., Scarf, B., Sindone, L., Baldry, G., & Zhao, Y. (2020). Consumer behaviour during crises: Preliminary research on how coronavirus has manifested consumer panic buying, herd mentality, changing discretionary spending and the role of the media in influencing behaviour. Journal of risk and financial management , 13(8), 166. https://www.mdpi.com/1911-8074/13/8/166 . West, S. E., & Williams, R. C. (2017). Estimates from a consumer demand system: implications for the incidence of environmental taxes. In Distributional Effects of Environmental and Energy Policy (pp. 117-140). Routledge.