RUNNING HEAD: FUNDAMENTALS OF MACROECONOMICS 1

Fundamentals of Macroeconomics
ECO/372
February 5, 2015
Samuel Imarhiagbe

FUNDAMENTALS 2
Fundamentals of Macroeconomics Macroeconomics studies an economy at the aggregate level. It is concerned with the workings of the whole economy or large sectors of it. These sectors include government, business, and households. Macroeconomics deals with such issues as national economic output and growth, unemployment, recession, inflation, foreign trade, and monetary and fiscal policy (Koch, 2015). Macroeconomics is utilized when looking at the impact that activities such as purchasing groceries, massive employee layoffs and a decrease in taxes have on the government, households and businesses.
Purchasing Groceries Grocery shopping is an activity that almost every household is expected to participate in. Approximately 15% of American income is spent on groceries; the smallest rise in prices can impact a family’s budget (Parker, 2011). Food prices are determined by several factors including, but not limited to, the economy, taxes, regulations and demand. If the demand for certain products is down or the economy is not doing well, the government may increase taxes on items, including groceries. If

the price of groceries increases, consumers may be obligated to purchase a lesser amount of groceries or may begin purchasing a
FUNDAMENTALS 3 lower quality of groceries from discount stores or bargain outlets. By purchasing less groceries or purchasing groceries from bargain outlets, businesses may begin to suffer. For instance, consumers who normally purchase their groceries from a Mom and Pop grocery store in their neighborhood may be forced to shop at a grocery supercenter such as Wal-Mart or a bargain store such as Aldi’s if grocery prices dramatically increase. The