Mic

roeconomic
f
act
orsthata
ffe
ct
i
ndust
ry
Na
me-
nandi
shh
Re
gno-
mb180032
Mba3r
dse
mis
ter
Wha
tIsaMa
croe
conomi
cFa
ctor
?

Ama croeconomicfac
tori
saninf
lue
ntial
fisc
al,na
tura
l,orgeopoli
ti
caleve
ntthatbr
oadlyaf
fect
saregi
onalornat
ionale
conomy.Macroe
conomic
fac
torstendtoimpactwideswat
hsofpopulati
ons,r
atherthanjus
taf e
ws el
ecti
ndi
vidual
s.E
xamplesofmacroe
conomicfac
tor
sinc
ludeeconomi
c
outputs,
une mploy
me ntr
ate
s,andinf
lat
ion.Thes
eindic
atorsofeconomicperf
ormancear
ec l
osel
ymonit
oredbyg ov
ernments
,bus
iness
esand
consume r
sa l
ik
e.

AnAc
ade
micL
ooka
tMa
croe
conomi
cFa
ctor
s

Therelat
ionshi
psbe t
we e
nv ariousma c
roeconomicfac
torsar
ee xt
ens
ivel
ystudiedi
nt hefi
el
dofma croeconomics.
Whilema cr
oeconomicsconc
erns
thebroade c
onomya sawhol e, micr
oeconomicsnarr
owsitsrea
lmofstudytoindiv
idualag
ents,s
ucha sconsumersandbusines
ses,andthe
ir
respect
iveeconomicbehaviorsandde ci
si
on-makingpatt
erns
.Ama cr
oeconomicfactormayincl
udeany t
hingthati
nfl
uencesthedir
ecti
onofa
parti
cul
arlar
g e-
sca
lema rke
t .
F orexample,f
isc
alpoli
cyandvari
ousre
gulat
ionscanimpa c
tstat
ea ndnati
ona le
conomies,
whi l
epotenti
al
ly
tri
ggeri
ngbroaderinte
rnati
ona limpl
icat
ions.

Ne
gat
iveMa
croe
conomi
cFa
ctor
s

Negati
vemacr
oec
onomicf
actor
sinc
ludee ve
ntst
hatmayje
opardi
zenati
onalori
nte
rnati
ona
leconomi
es.
Fear
sofpol
it
ica
linsta
bil
i
tyc aus
edbya
na
tion’
sinv
olv
ementi
naciv
ilori
nterna
tionalwa
r,ar
eli
kel
ytohei
ghte
ne conomi
cturbul
enc
e,duetot
herea
ll
ocat
ionofresour
ces,ordamaget
o
prope rt
y,asse
ts,
andliveli
hoods
.Unant
ici
patedcat
astr
ophiceve
nts
,suc
ha sthe2008Unite
dS tat
ese c
onomiccr
is
is,
subse
quentl
ycre
ate
daf
ar-
re
a chingrippl
eeff
ect,
r e
s ul
ti
ngi
nti
ghtercapi
tal
preser
vat
ionrequi
rement
sforbankingi
nsti
tut
ionsonag l
obal
scal
e.Otherne
gati
ve
ma croeconomicfac
torsincl
udenat
ural
disa
s t
ers
,suchaseart
hquak
es,t
ornadoes,f
loodi
ng,andbrushfi
res
.

Ne
utr
alMa
croe
conomi
cFa
ctor
s

Cert
aineconomics
hif
tsarenei
the
rposit
ivenornegat
ive
.Rathe
r,theprec
iseimpl
ica
tionsar
edete
rminedbythei
ntentoft
heact
ion,s
uchast
rade
re
gulati
onacros
sstat
eornati
onalbor
ders.Thenat
ureoftheact
ioninquest
ion,s
ucha sena
cti
ngorr
e s
cindi
ngat
radeembarg
o,will
tri
gge
rmyri
ad
ef
fect
s,dependi
ngont heec
onomybeinginf
luenc
ed.

Pos
it
iveMa
croe
conomi
cFa
ctor
s

Posi
ti
vema croeconomicfa
c t
orsincl
udee v
entsthatsubsequentlyf
osterprosperi
tyande c
onomicgrowth,wit
hinasi
ngl
ena ti
onoragroupof
nat
ions.
Fore xample,adecreas
ei nfuelpr
ice
swi t
hintheUni t
edS t
atesmightdriveconsumerstopurc
ha s
emor er
etai
lgoodsandser
vices
.
Moreover,
a sthede mandforgoodsa ndser
vice
sincrease
s ,nat
ionala
ndi nte
r na
tionals
uppli
ersoft
hoseitemswil
li
nvari
ablyenj
oyi
ncreased
rev
enuesfromt hehe i
ght
enedc onsume ra
cti
vit
y.Inturn,i
nc r
easedprofi
tsma ydriveupstoc
kprice
s.

Ma
croe
conomi
cFa
ctorCy
cle

Ec
onomiesareof
tencycl
i
catthemacroe
conomicl
ev el
.Asposi
ti
vei
nfl
uenc
espromotepros
pe r
it
y,i
ncrea
seddemandma yt
ri
gge
rhi
gherpri
ces
,
whi
chma y,
intur
n,suppr
esstheec
onomy,ashousehol
dsbecomemorerest
ric
ti
veofthe
irspendi
ng.Assuppl
ybe
ginst
ooutwei
ghdemand,pr
ice
s
mayaga
indip,l
eadi
ngtofurt
herpr
osper
ity
,unt
ilt
hene xts
hif
tinec
onomicsuppl
yanddema nd.
KE
YTAKE
AWAY
S

Ama
croe
conomi
cfa
ctori
sani
nfl
uent
ial
fi
sca
l,na
tur
al,
org
eopol
i
tic
ale
ventt
hatbr
oadl
yaf
fec
tsar
egi
ona
lorna
tiona
lec
onomy
.

T
her
ela
tions
hipsbe
twe
env
ari
ousma
croe
conomi
cfa
ctor
sar
eex
tens
ive
lys
tudi
edi
nthef
iel
dofma
croe
conomi
cs.

E
xampl
esofma
croe
conomi
cfa
ctor
sinc
ludee
conomi
cout
put
s,une
mpl
oyme
ntr
ate
s,a
ndi
nfl
ati
on.

Re
alWor
ldE
xampl
e

Di
sea
sescanal
sobedef
inedasmacr
oec
onomi
cfac
tor
s.Ca
seinpoi
nt:a
fte
rthe2014Ebol
avi
russt
ruc
kWestAf
ri
ca,t
heWor l
dBa
nkGr
oup’
s
Macr
oeconomi
csandF
isca
lPoli
cyGl
oba
lPr
act
ic
e(MFM)steppe
dintohel
psupportl
oca
lgov
ernment
sinc
ombati
ngthev
irus
.

Compe
teRi
skF
reewi
th$100,
000i
nVi
rt
ual
Cas
h

Putyourtr
adingsk
il
lstot
hetestwit
hourF REESt
ockSimul
a t
or.
Competewi
ththousandsofInves
topedi
atrade
rsandt
radeyourwayt
othetop!
Submittr
adesinavir
tual
envi
ronme ntbef
oreyoust
artri
ski
ngyourownmoney.Pra
ctic
etradingst
rat
e g
iess
othatwhenyou'
rerea
dytoent
erthe
real
ma rk
et,you'
vehadthepr
a ct
ic
ey ouneed.Tr
yourStockSi
mulat
ort
oday>>
De
fini
ti
onofMi
croE
conomi
cs

Micr
oeconomic
sisthebra
nchofeconomicsthatconc
entr
atesonthebehav
iourandperf
ormanceoft
heindiv
iduale
conomicage
nt swi
thi
nthe
ec
onomys uchasconsumer
s,f
amil
y,indus
try,f
irms,e
tc.
Itasce
rta
inshowtheli
mitedre
sourc
esareal
loc
ateda mongvar
iousi
ndi
vidual
stosat
is
fy
t
heirwants
?Aswe lla
sits
peci
fi
est
hec ondit
ionsfort
hebestposs
ibl
euti
li
zat
ionoftheres
ourc
es,i
nordertoatta
inmaxi
mumout putandsoci
al
wel
fare
.

Her
e,thedemandplay
sak e
yr ol
eindet
ermini
ngthequant
it
yandt
hepri
ceofaproduc
talongwit
hthepri
ceandquant
ityofrel
atedgoods
(
complementa
rygoods)a
nds ubs
ti
tut
eproduct
s,s
oa stomakeaj
udi
ci
ousdeci
si
onregar
dingtheal
l
ocat
ionofsc
arc
eresource
s,conce
r ni
ngthe
ir
al
ter
nati
veuses
.

Mic
roec
onomicsa
naly
zeshowindi
vi
dua
lsandhouse
holdsspe
ndtheiri
ncome?Howdopeopl
edecidewha
tamountt
osa
vef
orf
utur
e
c
onti
ngenc
ies
?Wha ts
etofgoodsa
ndserv
ice
sbestf
ulf
il
sthei
rne
e dsandwants
,int
hel
imit
edinc
ome ?

I
tal
sodeter
mineswha tpr
oductsandhowma nypr
oduct
sthefir
ms houl
dma nuf
a c
turetos
ell
?Atwhatpri
cet
hefi
rmshoul
dof
feri
tsg
oodsand
s
ervi
cest
othetarg
e taudi
ence
?Wha ts
ource
soffi
nanc
earetobeus edbythefi
rmt ocommenceoroper
atet
hebusi
nes
s?Howmanyandatwhat
r
atethework
ersaretobehir
edt oworkfort
hefi
rm?Whe nshoul
dt hef
ir
me xpand,downs
izeandcl
oset
hebusi
nes
s?

De
fini
ti
onofMa
croE
conomi
cs

I
nma cr
oeconomic
s,t
heent
ir
ee c
onomicphenomenaortheover
allec
onomyi
sta
lke
dabout
.Ba
sic
all
y,i
tfoc
use
sont
hebe
hav
ioura
nd
per
for
ma nceofa
ggre
gat
evari
abl
esandthos
ei s
sueswhi
chaff
ectthewhol
eec
onomy.
I
tinc
ludesr
e g
ional
,nat
ionalandi
nter
nat
ional
e c
onomie
sa ndcov
erst
hemajorar
easoft
hee c
onomyli
keunemployment,
pover
ty,g
eneralpri
ce
l
evel
,tot
alconsumpti
on,tot
alsav
ing
s,GDP(GrossDomest
icPr
oduct
),i
mpor
tsandexpor
ts,
economi
cgrowth,
globa
lis
ati
on,monet
ary/f
is
ca l
poli
cy,
e
tc.

Herewedis
cus
s,howtheequi
li
bri
umisat
tai
nedasar es
ultofchangesinthema c
roe c
onomi
cvari
abl
es.I
tasc
erta
instheleve
l ofec
onomi
cacti
vi
ty
i
ntheeconomy?Whatist
herat
eofunemploy
me nt,pov
ertyandinfl
ati
oni nthecountry
?Whataret
heiss
uesthatre
s ul
tinspeedi
ngupors
lowing
downoftheec
onomy?Wha ti
sthest
anda
rdofli
vingofpeopleinthecountry
?Wha ti
sthec
ostofl
iv
ingi
nthecountry?

F
urt
he r
,macr
oec
onomi
csnotonl
ydi
scus
sesi
ssue
swi
thwhi
cht
hee
conomyg
oest
hroug
hbuta
lsohe
lpsi
nre
sol
vi
ngt
hem,
the
rebye
nabl
i
ngi
tto
f
unc
tionef
fi
ci
ent
ly.

Ke
yDi
ff
ere
nce
sbe
twe
enMi
croa
ndMa
croE
conomi
cs

T
hepoi
ntsg
ive
nbe
lowe
xpl
ai
nst
hedi
ff
ere
ncebe
twe
enmi
croa
ndma
croe
conomi
csi
nde
tai
l
:

Micr
oeconomi
csstudi
esthepart
icul
arse
gme ntoftheeconomy,i
.e
. anindi
vi
dual
,hous
ehol
d,fi
rm,orindust
ry.I
tst
udiesthei
ssue
softheec
onomy
atani
ndivi
dua
lle
ve l
.Ontheotherhand,Macroeconomi
c ss
tudi
esthewholeeconomy,t
hatdoesnottal
kaboutasi
ng l
eunitr
atheri
tst
udi
es
agg
rega
teunit
s,s
uc hasnat
ional
income,ge
ne ra
lpricel
evel
,tot
alconsumpti
on,et
c.I
tdeal
swit
hbr oa
de conomici
ssues.
Mi
croe
conomi
css
tre
sse
soni
ndi
vi
dua
lec
onomi
cuni
ts
.Asa
gai
nstt
his
,thef
ocusofma
croe
conomi
csi
sona
ggr
ega
tee
conomi
cva
ria
ble
s.

Mi
croe
conomi
csi
sappl
i
edt
oope
rat
iona
lori
nte
rna
lis
sue
s,whe
rea
senv
ironme
nta
lande
xte
rna
lis
sue
sar
ethec
onc
ernofma
croe
conomi
cs.

Thebasi
ctool
sofmi
croe
conomi
csa
rede
manda
nds
uppl
y.Conv
ers
ely
,ag
gre
gat
ede
manda
nda
ggr
ega
tes
uppl
yar
ethepr
ima
ryt
ool
sof
macroe
conomics
.

Micr
oeconomic
sde
alswithanindivi
dua
lproduct
,fi
rm,househol
d,i
ndust
ry,wages
,pri
ces
,et
c.Conver
sel
y,Ma
croe
conomi
csde
alswi
tha
ggr
ega
tes
l
ik
ena t
ional
inc
ome,nat
iona
l output
,pri
celev
el,
total
consumpti
on,tot
alsa
v i
ngs
,tot
ali
nves
tment,
etc.

Mic
roeconomic
sc oversi
ssuesli
kehowt hepri
ceofapar
ti
cula
rcommodit
ywil
laf
fec
tit
squa
nti
tydemandedandquanti
tysuppl
i
e da
ndvic
ever
sa.
I
ncontras
t,Macroeconomicscoversmajori
ssuesofa
neconomyli
keune
mployment
,monet
ary
/fi
scal
poli
ci
es,pov
erty
,int
e r
nat
iona
ltr
ade,
i
nfl
ati
onaryi
ncreaseinpri
ces,defi
ci
t,e
tc.

Mic
roeconomic
sdeter
minethepr
iceofapart
ic
ularc
ommodityal
ongwit
hthepri
cesofc
omplement
aryandthesubs
ti
tutegoods,wher
easthe
Macroe
conomicshel
psma i
nta
int
hegenera
lpric
elevel
,aswe
lla
sithe
lpsi
nresol
vi
ngma j
ore
conomici
ssuesl
ik
einfl
ati
on,def
lat
ion,di
si
nfl
ati
on,
pov
erty,une
mployment,
etc.

Whi
l
eana
lys
inga
nye
conomy
,mi
croe
conomi
cst
ake
sabot
tom-
upa
ppr
oac
h,whe
rea
sthema
croe
conomi
csc
ons
ide
rsat
op-
down