How does macroeconomic change affect business?

How does macroeconomic change affect business?

What are the effects of a recession?

• Stagflation if inflation is on the increase
• Depreciation
• Less consumer confidence- Negative multiplier effect
• Demand for inferior goods increase
• Rising unemployment

Analyzing the Macro Economy: Aggregate Demand and Aggregate Supply

Aggregate demand is the amount of demand there is for goods and services in an economy over a period of time.

AD= Consumption + Investment + Government Spending + (Exports - Imports)

To increase AD:

• Lower interest rates
• Decrease taxes
• …