Eco 372 Week 2 Paper

731 Words Jul 22nd, 2015 3 Pages
Fundamentals of Macroeconomics Paper
Kimberly Lincoln
ECO/372
June 29, 2015
Dr. Bob Larkin
Fundamentals of Macroeconomics Paper
In this paper we will discuss the following common macroeconomic activities: purchasing of groceries, massive layoff of employees, and decrease in taxes. We will look closely at how each of these activities affects government, households, and businesses. Then take a look at the flow of resources from one entity to another according to this week’s reading, Figure 3-1 from Colander.
Purchasing of Groceries
Purchasing groceries affects the government, our households, and businesses. Everyone has to eat and most of us are lucky enough to be able to shop at our local grocery store to bring food home for our
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When someone is laid off their income stops and they no longer have the means to spend as they have been in the past. They can no longer afford to eat out at restaurants, buy nice things, or indulge as they had been with a regular paycheck. And if the person is unable to find more work, then even necessity items become out of reach. They may go on unemployement and government assistance such as food stamps and Medicaid or Medicare. When people are hurting financially this affects our businesses negatively because the sales will go down with a lack of people spending money in stores; especially on luxury items. Then we have the ripple effect causing a need for more layoffs for more businesses since sales are down from people no longer being able to afford products. When the ripple effect goes into play and more and more businesses are forced to make massive layoffs our country faces depression and recession. Our country relies on consumers to have a constant spending cycle and when the cash flow comes to a halt our system comes to a halt affecting workers’ wages and shareholders returns.
Decrease in Taxes
The government relies on collecting taxes in order to create revenue and function successfully. A decrease in taxes affects business and the government differently. A decrease in taxes is good for business and bad for the government. Many entitites rely on government funds in order to operate and function
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