Essay about Divisions of The Field of Economics

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Economics is the science that permits you to assess your company's position in the business cycle as needed. Economics works hand-in-hand with corporate strategy. While strategy addresses the “how” and “why” of business decision-making, macroeconomics tries to pinpoint the “when” of strategic decisions. As a member of the management team in a growing business part of your responsibilities will be to analyze economic conditions and predict recessions and recoveries based on the business cycle. If you anticipate a recession, you will probably propose cutting production and trimming inventories. You may even have to downsize the company, either by layoffs, hiring freezes, curtailing capital spending, or any combination of the three; in…show more content…
Macro Economics The field of economics is split into two distinct branches. Microeconomics covers the functioning of individual markets for goods and services. It addresses how these markets are structured and how the pricing of goods and services and production costs is determined. Micro economists believe it is the forces of supply and demand in any market eliminate any shortages or surpluses in that market. Using Adam Smith's "invisible hand" metaphor, competitive markets will provide the most efficient distribution of resources. Macroeconomics focuses on shifts in the business cycle, and the implications of these movements in economic growth, inflation, recession, productivity, budget deficits, trade deficits, and the value of our currency. Macroeconomists believe that the broader economy, composed of many goods and services will not always self-correct. Lengthy periods of unemployment and inflation can occur, as well as trade deficits; and it may take government intervention to remedy the situation. Therefore it may be necessary for government to periodically stimulate the economy during a recession or restrain the economy to slow inflation or decrease the value of the currency to improve the balance of trade. Government achieves this by applying fiscal, monetary, and exchange rate policy tools. When government changes fiscal policy, it uses increased expenditures or more tax cuts to stimulate the economy. When it wants to fight inflation it can reduce

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