Macroeconomics and Economy in General

Macroeconomics
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Part A
1 Describe three (3) ways we can use macroeconomic analysis, with one (1) original example for each way.
Macroeconomic basically explains how the economy works in general. Macroeconomic analysis is important in that it helps in understanding and even making preemptive decisions based on certain elements of the economy. There are a number of ways that macroeconomic analysis can be used by people.
First, macroeconomic analysis can be used to determine the exchange rates. By using the daily rates of currencies of the country in relation to the values of other currencies, one can make the right business decisions, especially if it entails investing or imports. For example, those in stock exchange can do their trade based on the varying rates of foreign exchange rates at the opening and closing of each day.
Secondly, macroeconomic analysis can be used by economists in economic decision making, especially in instances where the global prices of goods are unfavorable for the citizens. Through the analysis, the people within can be shielded against inflation or deflation. For example, the businesses that rely on buying goods to last them a month or two, with the returns expected to be used for paying bills. Inflation can really reduce the margins. Macroeconomic analysis can help shield them from this. This can help local and small businesses that are usually very sensitive to slight fluctuations in the market.
Finally, macroeconomic analysis can be used to determine government spending and borrowing, as well as taxes. Through the analysis, the government can identify the deficits in its budgetary requirements. Increased government spending can reduce economic growth rate. So through analysis, the government can determine just what enough to keep things running is.
2. You are running a small yard maintenance business for the summer. What do you expect to happen to the number of yards you can maintain in a day as you add workers if you don't purchase more capital equipment (like mowers and leaf blowers)? Provide at least two (2) supporting facts to support your response.
This follows the principle of diminishing returns. According to the principle, there comes a time in the process of production, whereby an addition of a certain factor doesn’t really have a significant impact in the production efficiency. This applies when all other factors are held constant, or ceteris paribus. There isn’t much increase in the amount of goods produced just because a factor of production was increased. For as long as a factory or a production line is operating at its optimum, there is no amount of additional production factors that would result in an increase in efficiency (Reed, 2019). While the principle doesn’t necessarily state that there would be a reduction in production with additional elements at optimum production, the results are usually so.
The graph typically levels off once the optimum production has been reached. For this case, the current number of workers is already ensuring that the production is at optimum. First, adding more workers would simply imply that the work slices for each worker will reduce in order to be distributed to ...