Demand And Macroeconomics

This paper is aim to show how both macroeconomics and microeconomics plays a role in the overall success of an organization. The key decisions confronting the firm right from inception to operation to growth is themes business economics can explore and which are useful for entrepreneurs and business leaders. With increasing globalization, the fact that firms now operate in a global arena means that they must have the knowledge of how macroeconomic trends affect microeconomic decisions.

Supply and Demand

In economics, demand refers to the product, which an individual is willing to purchase for a specific amount of money. When looking at economics the first thing that comes to mind is supply and demand. In our everyday life, we use different

Aggregate supply refers to the total supply of goods and services in the United States. The purpose aggregate demand is to improve the economic growth therefore growth will drive demand. When a family income has an increase in their finances, they tend to spend more money, this allows the company to gain an increase in profits then they are able to increase their workers’ pay. In 2008, the United States watched as the housing market crashed, causing many new homeowners to lose and walk away from the property. Majority of the new homeowners applied for the low interest rate home equity loans. Their payments were more than the income coming into the home. According to Baffoe-Bonnie, 1998, “The housing market in the US accounts for more than 50% of the country’s fixed capital stock”. “Economic theory suggests that wealth is one of the key drivers of aggregate consumption in any economy, and so therefore, a downturn in the housing market is likely to be followed by a decrease in household consumption levels, which may in turn have adverse effects on the growth rate of an

It examines the characteristics of the economy output, employment, inflation, and the interest rate. Few of macroeconomics indictors includes inflation, public deficits, and unemployment. “Macroeconomic indicators share important characteristics that set them apart from other indicators, such as those covering human rights or government transparency (e.g. Cooley and Snyder 2015).” Macroeconomics focuses on the economy between businesses and individuals household. When the economy is operating at its natural level of employment, there could be an increase in unemployment. “The rate of unemployment consistent with the natural level of employment is called the natural rate of unemployment.” When Business experience a decrease in production, it may generate additional unemployment. Another goal of macroeconomic is economic growth which is defined as a long-run process that occurs as an economy’s potential output increases.

Conclusion

The conclusion of the research in economics both macroeconomics and microeconomics have a role they play to help an organization to be successful. The economy places a big part of our everyday lives. Customers help determine the direction that the economy is going, however the Government is responsible for the money