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An Introduction To Microeconomics Macroeconomics And Globalization Economics Essay

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Microeconomics is analysis of individual firm or market and their price mechanism and macroeconomics on the other hand is analysis of economy, economic growth and development. There are various features we need to consider for microeconomics. Decision maker should understand many important factors. [1] The basics of demand and supply and the workings of the price mechanism, how to analyze production costs, the importance of market structure, the relevance of market structure to business strategy, trade and competitiveness in the global economy.[2] The main features we need to consider for macroeconomics are the relevance of economic indicators and the basic data of the macroeconomic, the debates over fiscal policy, budget deficits and surpluses, and the national debt, the relationship between money and inflation, the debate over stabilization policy: is there a trade-off between economic growth and inflation? the role of interest rates in the conduct of monetary policy, the balance of payments, international capital flows and the Implications of alternative exchange rate regimes and the key concepts of international finance.[3]

The above point are the key factor to consider macro and micro economy as driving force changes to global economy.

Driving Forces of Globalization

The last two decades have seen the evolution of the global manufacturing environment. Majority of the manufacturers have global presence through exports, strategic alliances, joint ventures or as a part of a committed strategy to sell and produce in foreign markets.[4]

Example macro economics changes & driving forces of Globalization:

The study of an economy in its largest sense, that is, macroeconomics studies gross domestic product, unemployment, inflation, and similar matters. It does not look at the function of individual companies and only tangentially studies individual industries. It is useful in helping determine the aggregate effect of certain policies on an economy as a whole. See also: Microeconomics.[2]

Government use macroeconomics polices to achieve their economic objectives. These policies influence economics activity and thus help government attain macroeconomics goals

Fiscal Polices:

Fiscal policy refers to the polices of government with respect to its spending and mobilization of resources government expenditure consist of purchase and transfer payments Government purchases referred to spending on goods and services such as the construction of roads dams salaries to public servant etc.

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Taxation is another important polices of fiscal policies which affects the economy in two ways changes in tax structure have direct impact on people disposable income which in turn affect the amount they spend on goods and services and the amount they save.[4]

Momentary Policy:

All Morden policy societies use money as the medium of exchange since money can be exchanged for goods and service it can be also regarded as financial assets. the momentary policy of a country is formulated by its central bank and it used to influence the total quantity of money interest rates and total volume of credits in economy .[3]

International policy:

Trade polices related to traffic and non tariff trade regulations that limit or promote the import and export of country the last part of 20th century witnessed an increase in the pace of globalization which made many world economics highly dependent on international trade during the 1970 and 1980 many east Asian countries used their trade during strategically to increase economic growth. [1]

Exchange Rate policy:

Apart from trade policies polices related to foreign exchange management play a important role in international trade the international trade of a country is affected by its foreign exchange rate the foreign exchange rate is the rate at which a country currency can be exchanged with a foreign currency the exchange rate policy of a country forms a part of its momentary policies.

Different country follows different exchange rate systems in some system the exchange rate is fixed against currencies whose exchange rate is stable in other exchange rate is determined purely by supply and demand.

Price and income polices:

Price and income polices are used to influence the working of the market economy under this policy government sets the rice of some goods and services and determine the wages the government takes these measures to control inflation and protect jobs in the domestic market. According to economists these measures should be temporary otherwise they may lead to distortion and inefficiencies in the economy.[2]

Employment policies:

Employment policies are aimed at generated employment opportunity .in India the government takes up project that require huge labour force during non agricultural seasons when employment in rural areas is low.[4]

Example micro economics changes & driving forces of Globalization:

Micro economy studies how individuals and firms allocate these scarce resources to produce and distribute goods and services

The field of economics is broken down into two distinct areas of study: microeconomics and macroeconomics. Microeconomics looks at the smaller picture and focuses more on basic theories of supply and demand and how individual businesses decide how much of something to produce and how much to charge for it. People who have any desire to start their own business or who want to learn the rationale behind the pricing of particular products and services would be more interested in this area.[3]

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Macroeconomics, on the other hand, looks at the big picture (hence “macro”). It focuses on the national economy as a whole and provides a basic knowledge of how things work in the business world. For example, people who study this branch of economics would be able to interpret the latest Gross Domestic Product figures or explain why a 6% rate of unemployment is not necessarily a bad thing. Thus, for an overall perspective of how the entire economy works, you need to have an understanding of economics at both the micro and macro levels.[2]

The basics of demand and supply and the workings of the price mechanism is theme of micro economy

Consumer play an play an important role in determine the demand for a firm products thet are quality conscious and price sensitive the success of product is dependent on the consumers acceptance of the product. Price sensitivity customers like to buy product in small qualities at affordable price.

For example Motorola had initially launched seven models of cellars phones Nokia launched a simple cell phone at affordable price which captured the market therefore firms must try to offer products that are of high quality at affordable price.

Consumer demand is important aspect that helps us know what to produce and what is demand in market.

These are the basic factors that help the globalization to drive a change in the economy and improve the throughput of each and every efforts that we make macro and micro economics are the most powerful tool to analysis these things


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