Economics for Business: Impact of Macroeconomic Indicators on UK Businesses

ECONOMICS FOR BUSINESS

TABLE OF CONTENTS
1. INTRODUCTION.......................................................................................................................1
Macro-economic and the key macro-economic policy issues.....................................................1
Government influences on the policy issues in context of UK economy in the post Covid era..2
2. THE MACRO ECONOMY.........................................................................................................2
Key participants in an economy and their role in the circular flow.............................................2
Relevance of macro-economic indicators and their impact on the country's economy...............3
Key macro-economic objectives of government in general and in context of UK economy......3
3. THE MACRO ECONOMY AND ITS IMPACT ON BUSINESSES.........................................4
Impact of macro-economic indicators on businesses...................................................................4
UK macro-economic situation in 2020-21 and its impact on the businesses..............................5
4. FISCAL AND MONETARY POLICY.......................................................................................7
Fiscal and monetary policies and the use by the government to influence the macro-economic
indicators......................................................................................................................................7
Fiscal and monetary policies applied by the UK government to address issues relating to UK
businesses.....................................................................................................................................8
REFERENCES................................................................................................................................9

1. INTRODUCTION
Macro-economic and the key macro-economic policy issues
Macro-economics can be considered as the branch of economics that functions at the
larger level which is economy as a whole and it is involving the aggregate decision-making for
the economic growth and prosperity. There are two major elements of macro-economics one is
the long term economic growth and the other is the short term economic cycles.
The key macro-economic policy issues are:- Unemployment- This is one of the significant issues in most of the economies arising
because of lagging behind of the creation in the job opportunities as compared to the
demand for the same. In this case a portion of the labour remains involuntarily idle and
this can be a dead-weight loss for the economy by insufficient utilization of the available
resources with the economy. The governmental policies are being framed and trying to
find the solution of the problem faced by the economy. Trade cycles- The trade cycles in the economy follow the cyclical regularities of the
uptrends and the downtrends in the economy and these periodic fluctuations have the
tendencies of the varying output and the employment levels (Celebi and Hönig, 2019).
There are different phases of the economy like the boom, recession, depression, recovery
and the slump period against which macro-economics try to find the remedial measures. Economic growth- This is also one of the key issues in the macro-economics wherein the
increase in the level of the potential output shall be considered as economic growth. The
gap analysis shall be taking place in the economy in respect of the potential level of GNP
and the actual that is derived and accordingly the solution shall be suggested to improvise
the same.
 Inflation- The inflation is the other major issue that is faced by the economy in which
there shall be the rise in the general price levels of the commodities. This situation
generally arises when there is growth in the economy or the rise in the GNP. When the
level of such inflation is moderate it is not much issue for the economy and its
participants but on the contrary sometimes the level of such rise are limitless then the role
of macro-economic comes into force for the adjustments.
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Government influences on the policy issues in context of UK economy in the post Covid era
Post the Covid era in UK there are many disruptions in the economy as a whole and the
various and there are various policy issues as a response to the situation where the government is
trying to seek control through influencing the current scenario. There are huge damages to the
small and the medium enterprises which has lead to the fallback of the economy. In order to
revive the economy and recover the businesses the government has framed the national scheme
providing aid to the citizens in the form of tax reliefs and deferrals, loan guarantee schemes,
huge sums of grants have been issued, extra budgetary assistance etc. Since the growth in the
economy has slowed down due to the Covid situation, the government has undertaken the stricter
control measures and are trying to provide the assistance and financial aid to recover the
economy from the downfall it is currently facing.
2. THE MACRO ECONOMY
Key participants in an economy and their role in the circular flow
In the circular flow of the economy there are different participants who are regulating the
economy and its activities. The economy can either be closed or open in different situations.
Some key participants that play the major role in the economy are:- Households- They are the first participant in the circular flow who are the ultimate
consumers of the goods and services. They shall be supplying the various resources to the
factors market like the land, manpower, money etc. which shall be utilized by the firms to
produce the goods and services that are finally consumed by them. Firms- They are the other participants who shall be taking the various resources from the
factors market and applying them in the business so that they can produce the finished
goods and services that can be consumed by the households (Zainal Abidin and Haseeb,
2018). Factors market- They involve the essentials that are used for the production of the final
goods and services. The supply of these resources is through the households and the
consumption is by the firms in the process of business. Goods and services market- The goods and services market offer the final products that
are formed by the businesses and they are purchased for money by the households who
shall consume them for meeting their requirements.
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