Macroeconomic Impact on Business Operations "Job Weak, Unemployment Soars, More Cuts coming, and Bankruptcies Jump 40%." These are typical headlines we see in the newspaper, internet, and journals. We also hear these in news, radio stations and office chats. These are valuable information that economists use to analyze economic situation of the country. These can also be information that individual use to guard their spending. Information like these provides major decision for individual and for the country as a whole.
The state of the economy is important both on a micro and macroeconomic level. On a macro level, those in government pay close attention to these statistics in order to guide fiscal and monetary policy. On a micro level, households can use this data to guide their consumption and investments, while businesses can use this information in their strategic planning. In looking at economic information, there is current data, historical data, and economic forecasts. This enables decision makers to get a more complete picture of economic trends and see the relationship between various economic indicators.
Common Sense Economics: What Everyone Should Know About Wealth and Prosperity, written by James Gwartney, Richard Stroup, Dwight Lee and Tawni Ferrarini, explains the foundation of economics and how it all works in all aspects of our lives from the role of the government trickling down to personal credit cards and savings. This book was written with clear language for the audience to understand and comprehend the large amount of information within its condensed size. The authors’ target audience for this book seemed to be for those individuals wanting to learn the mechanics of economy including economic growth and stability. Gwartney separates his book into four parts: Part I, Twelve Key Elements of Economics, Part II Seven Major Sources of Economic Progress, Part Three Economic Progress and the Role of Government, and Part IV Twelve Key Elements of Practical Personal Finance.
Only what to produce and how to produce, since distribution is not the task of economics.
the business needs to make up the costs and the only way to do this is
Macro-Economic Factors that Affect a Business There are macro-economic factors which affect a business and there implications need to be considered when planning ahead. The interest rate is the basically the cost of borrowing, the price of money. If money is borrowed it is the percentage over and above the original loan that has to be paid back. The interest rate is a vital tool of economic management for the government. Adjusting the interest rate is a key part of the government’s monetary policy.
Keeping up to date with all the latest and most important economic headlines around the world is a part of my daily routine, as well as reading newspapers and economic magazines, adapting my studies to the real ...
perfect way to see how an economy is doing in every way, you can see the general health of the
In order to assess the current state of the economy, the examination of important economic indicators or variables has always played a vital role in the understanding of the complex economic systems we live in. The analysis of these economic variables studied by many, not only has served as a tool to evaluate the current economic performance of a country, but also has allowed experts to envisage and continue the pavement of an economy's road. Currently, some economic variables have had favorable improvements indicating a general good outlook for the economy for the following months, requiring a further individual analysis and comparisons in order to foresee crisis or successes.
theory of the firm it is in the interest of the firm to keep the
The study of economics is important to everyone. Financial decisions affect everyone in their day-to-day routines. Economics is the study of how society manages its scarce resources (Mankiw, 2012). Macroeconomics is the study of economy wide phenomena, including inflation, unemployment, Gross Domestic Product, and economic growth (Mankiw, 2012). Macroeconomics is important because, it is how all of us relate into markets and economies. Many news articles today are centered on the economy and current events. One of these articles lends itself to many economic principles and ideas. Even though there are many important topics not covered in the article, the article titled, "You Are What You Owe" in Time, encompassed many general economic principles as well as the many macroeconomics indices illustrated in the article.
In general the economy tends to experience different trends. These trends can be grouped as the business/trade cycle and may contain a boom, recession, depression and recovery. A business/trade cycle (see figure 1) is the periodic but irregular up-and-down movements in economic activity, measured by fluctuations in real Gross Domestic Product (GDP) and other macroeconomic variables. Samuelson and Nordhaus (1998), defined it as ‘a swing in total national input, income and employment, usually lasting for a period of 2 to 10 years, marked by widespread expansion or contraction in most sectors of the economy’. These fluctuations in economic activity usually have implications on employment, consumption, business confidence, investment and output.
The business cycle is defined as the periodic fluctuations in economic activity which is measured by the changes in real GDP. The amount of economic activity depends on factors such as how much is invested by entrepreneurs towards their business, the quality of technology used by the entrepreneur, the policies which the government incorporate etc. Gross Domestic Product measures this economic activity. It is the total value of all of the goods and services produced by all of the businesses in a country. When GDP increases over time, this signifies greater economic activity, this is called economic growth. There are four stages of the business cycle- boom, recession, slump, recovery.
The macroeconomic environment is a dynamic environment, which could not remain unchanged (Gajewsky 2015). There are many factors influence the global macroeconomic environment, such as interest rate, exchange rate, GDP，aggregate demand, monetary policy and other macroeconomic variable (Oxelheim and Wihlborg 2008). These factors are closely associated with commodity price.
The topic of macroeconomics as a whole is very concerned with Business cycles. Short-term fluctuations in this business cycle often called booms and busts are what economist use to study macroeconomics as a whole. In turn these cycles are important to economist because they show the relationships that exist between markets. As the textbook states “What happens in one market is not usually independent from other markets, as we saw...during and after the recession of 2007–2009”( Chiang, MacMillan Publishers). As all this goes into the definition of a business cycle also stated in the textbook, is defined as “as alternating increases and decreases in economic activity” As this can be broken down into peaks, recessions, troughs, recoveries, all
Throughout the world most if not all economies have six main goals which consist of economic freedom, security, equity, efficiency, stability and growth. Also, throughout an economy every business and industry has its own business cycle. According to euntrepenuer.com a business cycle is defined as times at which an economy, business, or an industry contracts or expands. A business cycle has a large focus on economic booms and recessions. It is extremely important for managers and business owners to know where they are at in the business cycle in order to make good decisions for the business.