Macroeconomic factors are particularly crucial for multinational companies. An increase in the minimum wage could lead to decreased profits, while decreasing tariffs with external markets could end up boosting some businesses. However, there is certainly merit for graduates of executive MBA courses to consider some of these issues. Opinion is divided over the relevance of macroeconomic factors in an average business setting. These factors are often politically influenced, because they can be dictated by changes to economic policy. This could include a country’s employment rate, Gross Domestic Product (GDP), inflation or banking interest rates. In a business context it has become associated with the study of broad economic factors, including national statistics. ‘Macro’ derives from Greek and means ‘large’. Macroeconomics focus on ‘top-down’ factors that affect businesses Here’s how they’re applied in business to ensure profit growth. The terms macro and microeconomics may not be used specifically in the workplace, but they are indirectly crucial to every business decision. For instance, statistics may reveal that overall sales through smartphone apps are increasing, but it’s up to businesses to decide what to do with that information. Analysis of these variables is open to interpretation. This wide array of factors is commonly sub-divided into micro and macroeconomics. These could include the disposable income levels of your customer base, the cost of transportation, or even loan interest rates. Some examples of its components are – National Income, General Price Level, Aggregate supply, Aggregate demand, unemployment etc.As responsibility grows during a career in business, it becomes increasingly important for executives to consider and react to the economic factors that dictate performance. Some examples of its components are – Individual income and savings, price determination of a commodity, individual firm’s output and consumer’s equilibrium etc. It has a broader scope as it is related to the whole economy.Īggregate demand and Aggregate supply are its main tools. It has a narrower scope as it is related to a specific segment of the economy. It accounts for the aggregated demand and aggregated supply to determine the general price level. It accounts for factors such as demand and supply of a specific commodity to determine its price. It is useful in solving the major issues in the economy like inflation, unemployment and poverty. It is useful in regulating the prices of goods and services as well as the factors of production. It assumes that the economy can be in disequilibrium for a longer period of time i.e. It is based on the principle that the markets create equilibrium by themselves in a short period. It provides the solution to the problem of full utilization of resources in the economy. It provides the solution to the problem of “what, how and for whom to produce” It uses the top-down approach strategy to analyze the economy. It uses a Bottom-up Approach strategy to analyze the company. It deals with national income, distribution of income, employment and money etc. It deals with supply, demand, production, price levels and consumption etc. The purpose of macroeconomics is to maximize national income and economic growth. The purpose of microeconomics is to analyze the market and determine the price levels of commodities. It is the study of the economy as a whole. It is the study of a particular industry and segment of the economy. Unimax Publications Book’s Solution – PSEB.Usha Publication Book’s Solution – PSEB.
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