Fundamentals of Macroeconomics Paper Brittany

Fundamentals of Macroeconomics Paper

Brittany

ECO / 372

05/27/2015

Fundamentals of Macroeconomics

        There are a number of macroeconomic scenarios that people encounter on a near daily basis.  Grocery shopping, massive employee layoffs, and decreases in taxes are just a few examples.  Each scenario will be explained and together they provide an excellent example of the fundamentals of macroeconomics.  Businesses, households, and our government are all affected by economic activities.  Sometimes they are beneficial and other times they can cause a negative effect.

Groceries

The groceries we purchase every day from our local store some from all over the world.  This leads to international trade.  For instance, if a grocer in Texas is purchasing its avocados from a merchant in Mexico it is considered to be an international trade.  International trade is an efficient trade because it benefits our economy.  If the United States produced all of its own fruits and vegetables it could have a negative effect on supply.  The government, households, and business would be affected by a lack of supply of the products that they need.

There are many current events related to the purchasing of groceries.  Russia has a ban on all food imports coming from the United States.  Obviously this has a negative effect on international trade.  The United States is not able to benefit from this ban however there are smaller countries who do benefit with this ban because they were not able to compete with larger markets such as the United States.  Even zoo animals are impacted by this ban because much of the zoo’s food supply purchased internationally (Birnbaum, M. 2014).

Massive Employee Layoffs

Massive employee layoffs is another example of an economic activity.  Massive employee layoffs occur as a last resort by a business to protect its shareholders.  Unfortunately these layoffs negatively affect the government, households, and businesses.  When business executes a massive layoff, those laid off employees are forced to start doing budget cuts because they no longer have a source of income.  As a result of the budget cuts other businesses begin to see a decrease in profits.  These businesses then may find themselves in a situation where they must begin layoffs.  When companies begin massive employee layoffs it can cause the government to go into a recession.  Massive employee layoffs are truly a vicious cycle.  Blue Bell Ice Cream has recently started massive layoffs.  As a result of bacteria being found in their products several factories were shut down and the factory workers were laid off.   Over one thousand four hundred were laid off as of May 15th, 2015 and another fourteen hundred were furloughed (Noll, S. 2015).  Often time employees that are about to get laid off receive some sort of severance pay.  Unfortunately, even with severance pay a person has to begin fierce budget cutting while they seek new employment.  These former employees are now out of work and local businesses are feeling the effects of lower spending in their stores as a result of the layoffs.