Fundamentals of Economics

Fundamentals of Macroeconomics

ECO-372

June 16, 2015

Matthew Angner

Fundamentals of Macroeconomics

Macroeconomics is the study of the economy that deals with problems of inflation; unemployment rate, business cycles, and growth (Colander, 2013, p. 5). Inflation is when prices increase and purchasing value of money decreases. The rate of unemployment considers the number of people who are actively looking for a job, but are unable to find one (Colander, 2013, p. 5). A business cycle is a series of economical expansion and contraction cycles (Colander, 2013, p. 5). In macroeconomics, an economist studies and evaluates these factors in order to conclude the current economical state. Our environment constantly fluctuates; therefore the state of our economy does also. Our economy is affected by numerous factors and behavioral trends.

Just one event can cause a ripple effect of issues. In this paper I will attempt to describe how scenarios such as purchasing groceries, massive layoffs, and a decrease in taxes can affect the Government, households, and businesses.

PURCHASING OF GROCERIES

Buying groceries is a necessary task because people need food to survive. Yet, in harsh economic times buying groceries can be very strenuous on one’s budget. Families are forced to determine which foods are necessary and then which items they must go without. Many consumers will choose to buy processed food and nonperishable food in bulk such as, rice, beans, ramen noodles, and boxed dinners. In a struggling economy, even consumers whose jobs have not been affected will still become more cost conscious and will monitor their spending habits more closely. Much of America’s purchased food is imported from outside the country. So, when sales of imported goods are significantly reduced, then the entire global economic system can be affected by a decline in global trade. When consumers make fewer taxable purchases of groceries, then less money goes into the treasury, which has...