How does macroeconomic change affect business?
What are the effects of a recession?
- Stagflation if inflation is on the increase
- 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
- Increase exports
How does inflation affect us all?
- Inflation: The sustained annual increase in the general price level
- Real income takes into account inflation
- People will be…