ECON 5: Financial and Economic Interpretation and Communication

This economics assignment addresses three key questions. The first question explores the role of intuition in investment decisions, discussing its influence on recognizing problems and identifying risks, particularly when rational analysis falls short. The second question examines the benefits of free trade agreements, arguing that they facilitate trade, specialization, and access to global markets, especially for countries with varying population growth rates and resource endowments. The final question investigates the impact of macroeconomic policies (fiscal and monetary) on business success, emphasizing their role in influencing economic activities, money supply, and ultimately, business performance. The assignment supports its arguments with references to relevant research.

ECONOMICS 1
Financial and Economic Interpretation and Communication
Student’s name
Course
Instructor’s name
Institutional affiliation
City and state
Date

ECONOMICS 2
Question 1
Intuition is a mode that processes information in a non-sequential format. The specific
forms in which intuition influences decision making is in most cases misunderstood but however,
the influence can either be emotional or cognitive (Voss, 2014). Intuition plays vital roles in
making decisions regarding investment and these may include among others;
Since intuition involves one’s knowledge in the process of decision making, it helps in
recognising some problems within the society and later apply them in solving problems related to
making investment decisions (Voss, 2014). Furthermore, intuition helps decision makers to point
out risks which are ‘nonstandard’ in the process of assessing a business for investment.
In situations where investors come to realise there are some important facts that are
required and cannot be found using computers or online resources, they can turn out to using
human knowledge, for example creativity and curiosity (Erik et al, 2012).
Also, many researchers explain intuition as an observable fact that is very effective and
indicates the potential of emotions to determine decision-making cognitive negotiation (Erik et
al, 2012). This implies that there is no need for ‘conscious thoughts’ to experience emotions
though there can be situations where positive thoughts have an effect on a person’s will. In
addition, several investors base on their intuition so solve ‘complex’ calculations and other
problems in situations where rationality cannot help (Erik et al, 2012).
According to the current research, intuition is very relevant in investment decisions as
they can be fast and effective more so in areas where one has expertise.
Question 2

ECONOMICS 3
Free trade agreement is an agreement between two or more economies to reduce or
totally remove trade restrictions say tarrifs, quotas, total ban among themselves (Ansley, 2017).
In my own opinion, I think free trade agreements are more of a benefit to an economy. This is
due to the following reasons;
The agreement helps a country that has a low population growth rate and ints production
capacity is high to trade off its commodities to other countries. this helps the exporting countery
to minimise its losses due to excessive production (Ansley, 2017). Also, countries with a high
population growth rate find it easy to acquire needs say food that may be little to sustain its
population.
In addition, countries engaging in free trade agreement have got higher chances of
specialisation since different countries are endowed with different resources. This gives them a
chance of exploiting their resources since there is a ready market for their produce. Furthermore,
countries get access to other markets all over the world where they dispose off their exports.
There is always a good relationship among countries trading among themselves freely (Ansley,
2017). Countries with better relationships with others tend to have higher chances of
development in form of infrastructures, skilled labour where highly skilled personnel operate
freely all over the trade area.
Question 3
In any country, the macroeconomic policies that include monetary policy, fiscal policy
and physical policy are the major determinants for the functioning of businesses. These policies
play a major role of determining the performance of any business in an economy and so I think

ECONOMICS 4
its never possible for any business to excel in its performance minus relying on macroeconomic
policy and this is backed up by the following reasons;
With fiscal policy, the government uses taxes and its expenditure to influence economic
activities in the country (Issa & Antwi, 2017). In most countries, it is obliged that every
individual, company or institution pays tax either directly or indirectly and this indirect tax
affects a business.
Also, the monetary policy determines the supply of money in the country. This affects the
operation of the business in a situation where a contractionary monetary policy is used (Issa &
Antwi, 2017). Money becomes limited in consumers and so the amount sold by the business is
also limited. This negatively affects the performance of the business.
To wrap it all, many business find it difficult to succeed in their performance and they
cannot operate without being affected by the macroeconomic policy since it has a large impact
on all economic policies and money circulation in the country I(ssa & Antwi, 2017).

ECONOMICS 5
References
Ansley, B., 2017.How Free Trade Agreements Affect You, Even If They Don’t Affect Your
Country. Retrieved from: https://www.ge.com/reports/free-trade-agreements-affect/
Erik, D., Rockmann, K, W and. & Pratt. G. M. 2012. "When should I trust my gut? Linking
domain expertise to intuitive decision-making effectiveness."Organizational Behavior and
Human Decision Processes 119.2 (2012): 187-194.
Issa, M & Antwi, S., 2017. Role of macroeconomic variables on firms’ performance: Evidence
from the UK. Journal of cogent Economics and Finance. Retrieved from:
https://www.tandfonline.com/doi/full/10.1080/23322039.2017.1405581
Voss, J., 2014. The Intuitive Investor: Why Intuition Is Important. Behavioral finance. Retrieved
from: https://blogs.cfainstitute.org/investor/2014/06/24/the-intuitive-investor/