Fundamentals of Macroeconomics

Fundamental of Macroeconomics

Kelly Feuerhak

ECO 372

March 9, 2015

Hubertus Puaha

Fundamentals of Macroeconomics

“Macroeconomics is the study of how individual choice is influenced by economic forces.”  (Colander, 2013). Society and its related financial transactions are in constant flux. The following paper will discuss how the flux of items such as purchasing groceries, a massive layoff and a decrease in taxes affect households, businesses as well as governments.

Affects of purchasing groceries

The act of purchasing groceries has an affect not only on an individual household but also on the government and businesses as well. Households have a demand for groceries, this demand is determined by their need and the prices of the groceries sold at any given time. When purchasing the groceries the household’s disposable income is reduced and thus there is a reduction in purchasing other commodities.

Many of the items purchased when buying groceries are produced in other countries such as bananas from Brazil, and processed foods from China and so on. Governments are active in the trades of these items; these governments include the United States as well as the governments from which the products are imported. Governments can impose tariffs, bans, and regulations. These acts can alter the import and export of products into and from countries which in turn affects the businesses located in all countries.

Businesses are affected by the purchasing of groceries as they can obtain higher revenue from these purchases but this also affects the revenue of non grocery items such as entertainment, clothing, etc. when the prices of groceries is high. When consumers need to spend more of their income on groceries there is a tendency to spend less on other purchases. Another affect on businesses is the regulations by which they much abide. Recently Russia banned most imports of Western food products in...