[Solution]Topic: macroeconomic Analysis expenditure

Introduction  Macroeconomic analysis focuses on the aggregate behavior of different sectors of the economy. Topics in macroeconomics include the overall level of income and output…

Introduction

 Macroeconomic analysis focuses on the
aggregate behavior of different sectors of the economy.

Topics in macroeconomics
include the overall level of income and output produced in the economy, the
price level, and the amount of employment and unemployment.

The analysis focuses on how the
macroeconomic environment can impact managers’ decisions for competitive
strategies. Macroeconomic environment impacts individual firms through the
microeconomic factors discussed earlier in the textbook (demand, production and
costs…).

Case for Analysis: Measuring
Changes in Macroeconomic Activity: Implications for Managers.The case provides two points
for discussion:The case lists a number of
economic indicators using May – June of 2012 as an example. These indicators
include the GDP growth rate, initial unemployment claims, consumer confidence,
business inventory changes, and so on.The case shows the reactions by
a number of US companies to the macroeconomic environment. The companies are
specifically selected from different types of industries to show variations in
the macro impact. H.J. Heinz Co is a manufacturer
of ketchup and other packaged foods. It depends directly on the consumer
behavior, restaurant activities and so on.Joy Global Inc. is a producer
of mining equipment and is therefore driven by the activities of the mining
sector, which in turn is impacted by the outlook for the future.Harting Inc. is another
manufacturing firm that produces equipment used in factories around the world.
This firm is not just impacted by the US macroeconomic environment but also
that of the other major economies.

Measuring Gross Domestic
Product (GDP)

The framework to understand the
variables that influence the gross domestic product depends on the foundation
of the aggregate model that illustrates the circular flow in the economy.

Gross Domestic Product (GDP): The comprehensive measure of the market value of all currently
produced final goods and services within a country in a given period of time by
domestic and foreign-supplied resources.

Circular Flow: The framework for the aggregate macroeconomic model that portrays
the level of economic activity as a flow of expenditure from consumers to firms
or producers as consumers purchase goods and services produced by these
firms.  This flow is returned to
consumers as income received from the production process.
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