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Analysis of the Business Cycle

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1. Introduction
Macroeconomics studies the behavior of the overall economy. Macroeconomics examines economy-wide phenomena such as changes in unemployment, national income, growth rate, gross domestic product, and inflation and price levels. Research has proved that the main economic factors that affect aggregate demand are economic growth, real income, interest rates and consumer confidence. This assignment will discuss current macroeconomic conditions in the US and how these conditions have affected two monopolistically competitive firms, McDonald’s and Verizon. This paper will explore how the two companies responded to the macroeconomic conditions in terms of their stock performance, current and future sales revenue, current and future products, labor costs and hiring decisions.
1.1 The Current Economic Conditions
The current macroeconomic situation is fragile. The US economy is clearly in terrible shape, but what is unclear is how we got there. Many experts trace the origins of the current economic situation to the housing bubble that came about earlier this decade (Tanneeru, M). According to the estimate, the real GDP of the US increased .25 of 1 percent over its level in the 1st quarter of 2011. The growth rate of the economy is still volatile and while any increases in real GDP are welcome, they are not sufficient to reduce the unemployment pool (Watkins, T, 2011).
1.2 McDonald’s and Verizon
McDonald’s Corporation franchises and operates McDonald’s restaurants in the global restaurant industry. They serve a varied, limited, value-priced menu in more than 1,000 countries worldwide. By adding Dollar Menu items and introducing high-margin beverages such as coffee and fruit smoothies, McDonald’s has broadened its appeal beyond the young men who account for the biggest share of sales at mother other fast food chains (Reuters, 2011). Verizon

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