Fundamentals of Macroeconomics Macroeconomics is the study of the economy wide trends and changes related to unemployment, growth rate, national income as well as inflation and price levels. The economy is affected by large events such as the start or end of a war, terrorist attacks, natural disasters as well as worldwide sporting events such as the Olympics or the World Cup and so on. The economy is also made up of various smaller day to day events and economic activities which compound together to make up a growing or contracting economy. Today we will look at three economic activities and how they affect government, households and businesses. The topics we will cover include the purchasing of groceries, massive layoffs of employees and decreases in taxes. Purchasing of groceries might seem like a miniscule daily activity in the scheme of things, but the fact that these items are a necessity to all human beings makes them a large factor in total for the state of the economy. The tax on daily items such as groceries determines the revenue that is collected by the government. Also, there are well-known large grocery manufacturers and retailers that are essential to the health of the economy such as Kellog, Coca Cola, Walmart etc. If these retailers are not successful, they will not put the big dollars back into the economy and public projects as they would during profitable times and the economy and government will suffer for it. When the economy is in crisis or in recession, households often cut back on the money they spend on groceries which will lead to a decrease in prices and a decrease in overall demand for luxury grocery items. Businesses are forced to respond accordingly and lower prices or change to cheaper products in order to meet the demand of the consumer or people will go to other discount retailers to purchase groceries at a cheaper price.