midterm - winter 2011

midterm - winter 2011 - Hanifa Ayunisa and Francisco Perez...

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Unformatted text preview: Hanifa Ayunisa and Francisco Perez Intro to Business midterm 1. Please list and describe the importance of three mirco- and three macro-economic indicators, and how they reflect the health of the business environment. Microeconomics is the part of economics that looks at the behavior of people and organizations in particular markets, and it deals with pricing, supply, and demand. All sellers cannot just determine the price as high as they want because nobody is going to buy their product if they set price too high, and all buyers also cannot determine for the cheapest price as well. Therefore, there must be an agreement and negotiation between buyers and sellers in the marketplace to set the price. And to determine the price, the answer is found in the microeconomics concepts of supply and demand. Supply refers to the quantity of products that manufacturers or owners are willing to sell at different prices at a specific time, and demand refers to the quantity of products that people are willing to buy at different prices at a specific time. The place where quantity demanded and supplied meet is called the equilibrium point or price. Equilibrium price occurs where the amount consumers wish to purchase at a particular price is the same as the amount producers are willing to offer for sale at that price. Macroeconomics is the part of economics that looks at the operation of a nation’s economy as a whole, and it deals with GDP, the unemployment rate, and price indexes. Gross Domestic Product is the total value of final goods and services produced in a country in a given year. Either a domestic company or a foreign-owned company may produce goods and services included in the GDP as long as the companies are located within the country’s boundaries. If GDP growth slows, there are often many negative effects on business. A country can determine to be a good country if it has a high GDP. If the GDP of one country decreases, it means that something is wrong with the country. It may decrease GDP because of the decreasing in net export, government spending, investment, and consumer consumption. The unemployment rate refers to the number of civilians at least 16 years old who are unemployed and tried to find a job within the prior four weeks. Our unemployment rate right now is 9.4%. The government always tries to keep the unemployment rate as low as it can be because if the unemployment rate is too high, it means that its country is not running well, and government also needs to pay for that unemployment. The price indexes help to measure the health of the economy by measuring the levels of inflation, disinflation, deflation, and stagflation. The consumer price index consists of monthly statistics that measure the pace of inflation or deflation. Costs of goods and services are computed to see if they are going up or down. The producer price index measures prices at the wholesale level. Other indicators of the economy’s condition include housing starts, retail sales, wholesale level....
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This document was uploaded on 11/02/2011 for the course BUSINESS BA 101 at Montgomery.

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midterm - winter 2011 - Hanifa Ayunisa and Francisco Perez...

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