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FIN-335 Milestone Two: Draft of Macroeconomic EnvironmentCourtney DeAngelisSouthern New Hampshire University
Milestone Two2Draft of Macroeconomic EnvironmentMacroeconomics can be explained as how the economy operates as a whole or the overall picture. For investors to plan or predict trends in various markets, they look at variables such as gross domestic product (GDP), inflation, supply and demand, monetary systems, and foreign exchange and trade. These are analyzed within macroeconomics to develop models to explain relationships between these variables.The boom and bust cycle, also known as the economic cycle, “is the alternating phases of economic growth and decline” (Amadeo, 2018, para.1). During an economic growth or boom, the economy flourishes with significant growth domestic product (GDP) bringing high returns to investments. For the duration of a boom, “it accompanies a bull market, rising housing prices, wage growth, and low unemployment” (Amadeo, 2018, para.2). Interest rates are low making it easier to obtain credit from a central bank, to then invest that credit into purchasing stocks, properties or other financial instruments. Increased confidence contributes to the more volatile markets growing as the economy grows and high returns made on investments. When credit becomes too easily accessible and the interest rates are low, malinvestment occurs. The bust