Such analysis includes the theory of supply and demand.
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It also examines market structures, such as perfect competition and monopoly for implications as to behavior and economic efficiency. Analysis of change in a single market often proceeds from the simplifying assumption that relations in other markets remain unchanged, that is, partial-equilibrium analysis. General-equilibrium theory allows for changes in different markets and aggregates across all markets, including their movements and interactions toward equilibrium.
Economy of a country is influenced by two aspects, one at the micro level and the other at the macro level. A business person should possess the inquisitiveness to understand the magnitude of economic activities occurring both at the micro and macro level and how it influences the behavior of the economy as a whole. Though he plays a small role at the micro level, the synergistic effects of hundreds of such activities boost up the economy to a higher level. Economists are concerned about the overall economic growth of a country that is a clear indication of thriving industrial activity and entrepreneurial development.
What are the fundamental concerns of macro economics?
Business cycles experience crests and troughs due to inflations and recessions. It is still an intriguing factor that unemployment reaches a record high even during times of expansion and production of goods and services fall down during cyclical downturn and millions of people lose their job. If macro economics can find the right solution to these problem situations, better will be the prospects of many people's lives and fortunes.
Monetary and fiscal policies should be formulated in such a way to reduce the severity of business cycles. Monetary policies serve the purpose of stabilizing the prices by managing the expansion and contraction of the volume of money in circulation by the central bank or Federal Reserve, to achieve certain objectives like full employment and stability of exchange rates.
Fiscal policy is associated with the government's stand regarding public revenue, public expenditure and public debt. It strives to reduce inequalities in income and wealth and develop a socially optimum pattern of investment. The investment pattern varies from country to country and it depends on the core economic wealth available in the form of resources and feasibility of such investment. Say, developing countries like India has its concentration of activity centered on telecommunication, power generation through alternate fuel resources and information technology.
Taxation brings economic stability. During inflation, an increase in tax rates will reduce the purchasing power of people thereby reducing the prices in the economy. A reduction in tax rates during depression will stimulate economic investment and consumption.
Can mere introduction of generous subsidies and changes in industrial policies bring desired growth in the economy? A nation should aim to increase its productive potential by providing necessary ingredients of growth in the form of solid infrastructure.
There is no properly laid template for the unending problems of unemployment and inflation. Economists of each nation have to carefully study the previous patterns of business cycles and at the same time find ways to improve the living standards of people by increasing the per capita income, thus increasing the national income.
Back when the internet was new, online selling sites were used exclusively for old and unwanted things that needed a place to go. However, over the years sites like eBay have evolved into a more complex network, full of opportunities. If you were to go onto eBay during the holiday season, you would find a ton of brand new items up for sale priced higher than retail. Are the people bidding on the items crazy? No these sellers know how to use economics to their advantage.