Building Economics And Sociology –

Assignment – II by Bharani Madamanchi - 043

Q1) DEFINE MACRO ECONOMICS AND MICRO ECONOMICS. WHAT ARE
THE IMPORTANT FACTORS IN MACRO AND MICRO ECONOMICS?

ANS: Economics is divided into two different categories they

are:
MICRO ECONOMICS: Micro economics is the study of individuals
and business decisions. It includes customers, suppliers,
resellers, competitors, and the general public.
MACRO ECONOMICS: Macro economics looks at the decisions of
countries and governments. It includes economic factors,
demographic forces, technological factors, natural and
physical forces, political and legal forces, and social and
cultural forces.While these two branches of economics appear
to be different, they are actually interdependent and
complement one another. Many overlapping issues exist
between the two fields.
MPORTANT FACTORS IN MACRO AND MICRO ECONOMICS:
MICRO ECONOMIC FACTORS:
 CUSTOMERS
The kind of customer base that your business attracts, as
well as the reasoning behind purchasing your product, are
going to highly affect the way you create marketing
campaigns. Your customers can be local or international .
Important factors related to customers are:
 Stability of demand
 Prospects of sale growth
 Relative profitability
 Intensity of competition
SUPPLIERS
If a supplier of a particular product is the largest, or
even the only one, they are certainly going to have a big
influence on how successful your business is.The suppliers
are extremely important factors as:
 Key link in the value delivery process
 Insurance that your business has the necessary resources
 Essential determinants in terms of price increase or
decrease
RESELLERS
If you decide to sell your product through third party
reseller, or middlemen such as wholesalers and retailers,
then the success of your marketing is going to be highly
dependent on them. If let’s say, a certain retail seller has
a strong reputation, it will pass on to your product.
As a link between you and the customer, they are important
in terms of these factors:
 Promotion
 Sale
 Distribution
 Marketing
 Financial mediation
COMPETITORS
Logically, every business that sells the same or a similar
kind of product as you do is your competition on the market.
So, their sale and marketing tactics matter to you a lot.
You need to answer various questions, such as how their
product and its price affects yours and how you can make use
of that in order to gain an edge over them.
The three factors that matter in this case are:
 Desire competition
 Product form competition
 Brand competition
THE GENERAL PUBLIC
Every business organization has in its best interest to
appease to the general public.
Every step that you take needs to be viewed from their
perspective as well. It is extremely important how your
actions affect others because their opinion can be the one
thing that either pushes you towards success or pulls you
down from the pedestal.
The general public is very important in terms of:
 Public opinion
 Media
MACRO ECONOMIC FACTORS:
ECONOMIC FACTORS
Basically, the very environment of the economy can have an
effect on two essential aspects – your company’s levels of
production and the decision-making process of your
customers.
Some examples of economic factors affecting business:
 Interest rates
 Exchange rates
 Recession
 Inflation
 Taxes
 Demand / Supply
DEMOGRAPHIC FACTORS
Each and every chunk of the market is affected by universal
demographic forces. These are age, education level, cultural
characteristics, country and region, lifestyle, and so on.
The crucial variables include:
 How income variables influence business
 Age variables that affect business
  Geographic Region Variables
 Education Level as a Variable
TECHNOLOGICAL FACTORS
These factors are related to skills and ability that are
implemented into production, as well as all the materials
and technology that a particular product requires to be
made. They are essential and can have a big impact on how
well your business is running. It boils down to even the
most basic factors, such as what kind of maintenance
trolleys you use in order to preserve your tools and
equipment for as long as you possibly can.
Some of the most common technological factors are:
 Automation
 Internet connectivity
 3D technology
 Speed/power of computer calculation
 Engine performance and efficiency
 Security in terms of cryptography
 Wireless charging
NATURAL AND PHYSICAL FORCES
Every business must also take into account the very planet
and its resources. There are those that can be renewed, such
as forests and agricultural products, and those that cannot,
such as coal, minerals, oil, and the like. Both are strongly
related to production.
natural and physical forces can be:
 Climate change
 Pollution
 Weather
 Availability of both non-renewable and renewable
resources
 Laws that regulate the environment
  Survival of particular biological species
POLITICAL AND LEGAL FORCES
The market develops according to the political and legal
environment in various areas. This means that every business
needs to be up to date with such forces worldwide in order
to be able to make the right decisions.
This generally includes legal factors such as:
 Copyright law
 Employment law
 Fraud law
 Discrimination law
 Health and Safety law
 Import/Export law

Q2) DEFINE A) MARKET (IN TERMS OF ECONOMY)

B) BUDGET
C) RESOURCES & ITS TYPES
D) GDP (GROSS DOMESTIC PRODUCT)
E) GNP (GROSS NATIONAL PRODUCT)
F) NNP (NET NATIONAL PRODUCT)
G) INTEREST RATE
H) EMPLOYMENT

ANS. A) MARKET (IN TERMS OF ECONOMY):

 A market is a place where two parties can gather to
facilitate the exchange of goods and services.
 The parties involved are usually buyers and sellers. The
market may be physical like a retail outlet, where
people meet face-to-face, or virtual like an online
market, where there is no direct physical contact
between buyers and sellers.
 The term market also takes on other forms. For instance,
it may refer to the place where securities are traded
the securities market.
  Alternatively, the term may also be used to describe a
collection of people who wish to buy a specific product
or service such as the Brooklyn housing market or as
broad as the global diamond market.

B) BUDGET:
A budget is an estimation of revenue and expenses over a
specified future period of time and is usually compiled and
re-evaluated on a periodic basis. Budgets can be made for a
person, a group of people, a business, a government, or just
about anything else that makes and spends money.
A budget is an estimation of revenue and expenses over a
specified future period of time and is utilized by
governments, businesses, and individuals.
 A budget is basically a financial plan for a defined
period, normally a year. It greatly enhances the success
of any undertaking. As the saying goes, "if you fail to
plan then plan to fail."
 Corporate budgets are essential for operating at peak
efficiency. Aside from earmarking resources, a budget
can also aid in setting goals, measuring outcomes and
planning for contingencies.
  Personal budgets are extremely useful in managing an
individual's or family's finances over both the short
and long term horizon.

C) RESOURCES & ITS TYPES:

  Economic resources are the factors used in producing
goods or providing services.

 In other words, they are the inputs that are used to

create things or help you provide services.

 Economic resources can be divided into human resources,

such as labor and management, and nonhuman resources,
such as land, capital goods, financial resources, and
technology.

 An economy is a system of institutions and organizations

that either help facilitate or are directly involved in
the production and distribution of goods and servicE.

 Economic resources are the inputs we use to produce and

distribute goods and services.

 The precise proportion of each factor of production will

vary from product to product and from service to
service, and the goal is to make the most effective use
of the resources that maximizes output at the least
possible cost

 Misallocation or improper use of resources may cause

businesses, and even entire economies, to fail.
D) GDP (GROSS DOMESTIC PRODUCT):
 Gross Domestic Product (GDP) is the total monetary or
market value of all the finished goods and services
produced within a country's borders in a specific time
period.
 As a broad measure of overall domestic production, it
functions as a comprehensive scorecard of the country’s
economic health.
 Though GDP is usually calculated on an annual basis, it
can be calculated on a quarterly basis as well.
 Gross Domestic Product (GDP) is the monetary value of
all finished goods and services made within a country
during a specific period.
 GDP provides an economic snapshot of a country, used to
estimate the size of an economy and growth rate.
 GDP can be calculated in three ways, using expenditures,
production, or incomes. It can be adjusted for inflation
and population to provide deeper insights.
 Though it has limitations, GDP is a key tool to guide
policymakers, investors, and businesses in strategic
decision making.

Will India’s growth revive next year?

E) GNP (GROSS NATIONAL PRODUCT):

 Gross national product (GNP) is an estimate of total
value of all the final products and services turned out
in a given period by the means of production owned by a
country's residents.
 GNP is commonly calculated by taking the sum of
personal consumption expenditures, private domestic
investment, government expenditure, net exports and any
income earned by residents from overseas investments,
minus income earned within the domestic economy by
foreign residents.
 Net exports represent the difference between what a
country exports minus any imports of goods and services.
  That stands for GNP = Consumption + Investment +
Government + X (net exports) + Z (net income earned by
domestic residents from overseas investments minus net
 GNP measures the output of a country's residents
regardless of the location of the actual underlying
economic activity.
 Income from overseas investments by a country's
residents counts in GNP, and foreign investment within a
country's borders does not
 This is in contrast to GDP which measures economic
output and income based on the location rather than
nationality.

F) NNP (NET NATIONAL PRODUCT):

· Net national product (NNP) is the monetary value of
finished goods and services produced by a country's
citizens, overseas and domestically, in a given period.
· It is the equivalent of gross national product (GNP), the
total value of a nation's annual output, minus the amount of
GNP required to purchase new goods to maintain existing
stock, otherwise known as depreciation.

 NNP = Market Value of Finished Goods + Market Value of

Finished Services - Depreciation
Alternatively, NNP can be calculated as:
NNP = Gross National Product - Depreciation
 Net national product (NNP) is gross national product
(GNP), the total value of finished goods and services
produced by a country's citizens overseas and
domestically, minus depreciation.
 NNP is often examined on an annual basis as a way to
measure a nation's success in continuing minimum
production standards.
  Gross Domestic Product (GDP) is the most popular method
to measure national income and economic prosperity,
although NNP is prominently used in environmental
economics.
G) INTEREST RATE:
The interest rate is the amount a lender charges for the use
of assets expressed as a percentage of the principal.
 The interest rate is typically noted on an annual basis
known as the annual percentage rate (APR). The assets
borrowed could include cash, consumer goods, or large
assets such as a vehicle or building.
 The interest rate is the amount charged on top of the
principal by a lender to a borrower for the use of asset
 Most mortgages use simple interest. However, some loans
use compound interest, which is applied to the principal
but also to the accumulated interest of previous
periods.
 A loan that is considered low risk by the lender will
have a lower interest rate. A loan that is considered
high risk will have a higher interest rate.
 Consumer loans typically use an APR, which does not use
compound interest.
 The APY is the interest rate that is earned at a bank or
credit union from a savings account or certificate of
deposit (CD). Savings accounts and CDs use compounded
interest.
H) EMPLOYMENT:
 Full employment is an economic situation in which all
available labor resources are being used in the most
efficient way possible.
 Full employment embodies the highest amount of skilled
and unskilled labor that can be employed within an
economy at any given time.
 True full employment is an ideal and probably
unachievable situation in which anyone who is willing
and able to work can find a job, and unemployment is
zero.
 It is a theoretical goal for economic policymakers to
aim for rather than an actually observed state of the
economy.
 In practical terms, economists can define various
levels of full employment that are associated with low
but non-zero rates
 Full employment is when all available labor resources
are being used in the most efficient way possible.
 Full employment embodies the highest amount of skilled
and unskilled labor that can be employed within an
economy at any given time.
Economists define various types of full employment based
on their theories as targets for economic policy.

India - Employment To Population Ratio

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