Fundamentals of Macroeconomics

Fundamentals of Macroeconomics

Karen Fernandez-Valentine

ECO 372

November 24, 2014

Ashok Padhi

Fundamentals of Macroecnomics

Introduction

Everything that happens in the economy has a chain reaction, big or small. A negative reaction could lead to more negative reactions that affect consumers, the government and businesses. The same can be said for positive reactions. This essay will describe the effects of purchasing groceries, massive layoffs of employees and a decrease in taxes has on our government, households as well as businesses. The flow of resources from one entity to another will also be explained.

Purchasing of Groceries

A necessary act for every household is purchasing groceries; same for some businesses such as a daycare facility. This is also faced by the government when purchasing groceries for schools and prisons. Money has to be spent by the household when groceries are purchased and the amounts fluctuate depending on the family’s economic situation. The grocers business and profits are boosted when we spend money as well as boosting the bottom line of the manufacturers. Spending or not spending in some cases, affect the government when sales and income tax is paid by businesses and manufacturers.

Massive Layoff of Employees

Massive layoffs adversely affect everyone in the country. The government, businesses conducting the layoffs, the individual being laid off, and their families are all impacted by the layoffs. The effect on the government will be that unemployment payment will have to be made to these laid off employees.