Fundamentals of Macroeconomics
ECO/372 Principles of Macroeconomics
July 8, 2013
Macroeconomics describes matters such as development, increase in prices, job loss, exchange rates, interest rates, and budget shortages. Macroeconomics provides a combined outline to report these issues and to examine the effect of different policies, such as fiscal and monetary fiscal policies, on the total behavior of individuals. This paper will define specific terms of macroeconomics and how specific examples of economic activities affect government, households, and businesses.
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The businesses that supply products for purchases becomes a channel for consumers by providing jobs, products, and services to people in the community. Individuals purchasing groceries will make different choices, depending on the cost of products and the amount of money there is to spend. The amount of money the individual has to spend affects his or her household, the government, and that particular business. For example, if the individual has a little money to spend on groceries, the household suffers because there may not be enough food in the home. The business suffers because it is not making a huge profit from the individual who has less to spend. The government does make money from taxes from the store and the individual who has less to spend.
A massive layoff of employees is a ripple effect for a community and the economy. Many economic activities exist that affect different areas concerning the state of the economy. The government is ultimately affected when a community has stable resources from which individuals are fed and employed. When those resources become scarce the government experiences the effects over the long-run. Declines in consumer purchases constitute basic needs are not satisfied based on changes in expenditures that demonstrate an example of the multiplier effect.
Major reductions in spending by households mean lower tax revenues for the government and lower demands for businesses. For example, a huge layoff in a major car manufacturing plant of course affects the workers’ household but also means fewer car sales for car dealerships and also affects auto-part makers. The government will spend less on public services, transportation expenses, including trade, and industry improvements.
Decreases in taxes increases the amount of money an individual brings...