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Macroeconomic Impact on Business Operations
Macroeconomic Impact on Business Operations
The study of macroeconomics focuses on understanding the different factors that affect and create an economy. As stated, "?study of national or regional economies in terms of the total amount of goods and services produced, the total income earned the level of employment of productive resources, and the general behavior of prices." (Britannica, 2007). These factors can be affected by a government's monetary policies during times of economic uncertainty. Government monetary policies strive to encourage economic growth by using different methods or "tools" to affect outcomes. Understanding how each factor affects the other, will allow entities to make choices that may promote economic growth. The following paper will discuss methods used in the Federal Reserve simulation to influence the nation's money supply which in turn will affect macroeconomic factors.
Monetary Policies and Macroeconomic Factors
To have an economy that is recognized as "growing", one of two events must occur. "1) an increase in the real GDP must occur over a some time period 2) an increase in real GDP per capita occurring over some time period" (Brue & Campbell, 2004, Chap.7). Macroeconomic factors that can affect economic growth are unemployment rates, inflation, interest rates, and the Gross Domestic Product (GDP).
Economists categorize unemployment as an individual actively looking for a job, but cannot find one. This does exclude full-time students, retired individuals, children, and people not looking for a job (Brue & McConnell, 2004, Chap.8). Inflation is recognized as the in ...