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Pick a macroeconomic issue that affects a business you are interested in. For example, Inflation Unemployment rate Interest rates GDP growth Strength of U.S. Dollar
Pick a macroeconomic issue that affects a business you are interested in. For example,
- Inflation
- Unemployment rate
- Interest rates
- GDP growth
- Strength of U.S. Dollar vs foreign currencies
Research scholarly articles as well as popular business journals to provide enough information for you to discuss the issue intelligently. Don't worry about becoming an expert. Economists devote careers to these topics without mastering them.
Consider the following questions for the variable you chose:
- How accurately can a company predict the extent and timing of that variable? For example, loose monetary policy eventually leads to inflation and high interest rates. The Federal Reserve can intervene to maintain low interest rates for a time, but it can't control both interest rates and inflation. When inflation surges, the Fed usually allows interest rates to rise to choke off inflation, which also slows the economy. The pattern is clear, but the timing isn't.
- How might a business get ready for changes in economic variables? If a company expects inflation and/or recession (i.e., declining GDP), it might scale back expansion plans and focus on its financial health. It might lock in low rates on debt but be careful not to take on new debt to expand the business. How can your business benefit from knowing the pattern without knowing the exact timing?
- Even if you prepared for choppy economic waters, the difficulties could be greater than you anticipated. Your survival might depend on how quickly you can assess the oncoming changes and adjust to them. What are some tips for surviving?
- Conversely, how should a company anticipate and take advantage of a rebound after difficult economic times?
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