Question

• According to the textbook, the changes in the macroeconomic indicators affect the economic decisions of the 3 economic agents (household, firms, and government). Assume you are a business owner (manager). How do you use macroeconomic indicators in your business plan and strategy? Why are the indicators relevant for business decision making process? How do they affect business profit?
• There is an ongoing debate on how the unemployment rate is measured in the economy. Some people argue that the reported (official) unemployment rate actually understates the extent of unemployment in the economy. What are your opinions on official rate of unemployment? How do you think the official unemployment data can be improved to be a better measure of unemployment in the economy?

Answer 1

Ans

Inflation, interest rate, and minimum wage rate. They are relevant because

Greater inflation means greater demand and profits for business and lower means less profirs. Higher interest rate means higher cost of borrowing which discourages investment plans.on the other hand lower interest rate encourages investment as cost of borrowing falls. Higher wages mean higher cost of production which results in less profits. Lower wages reduce cost of production and thus increase output

Yes I think it understate the true extent of problem because people like discouraged workers are not considered employed according to this criteria. It can be improved by including discouraged workers and statistics on underemployed