why Marco economics is important to managers?

Macroeconomics can be best understood in contrast to microeconomics which considers the

decisions made at an individual or firm level. Macroeconomics considers the larger picture,
or how all of these decisions sum together. An understanding of microeconomics is crucial to
understand macroeconomics. To understand why a change in interest rates leads to changes in
real GDP, we need to understand how lower interest rates influence decisions, such as the
decision of how much to save, at the firm or household level. Once we understand how an
individual, on average, will change their behaviour we will then understand the large scale
relationships in an economy. Macroeconomists study aggregated indicators such
as GDP, unemployment rates, and price indices to understand how the whole economy
functions. Macroeconomists develop models that explain the relationship between such
factors as national
income, output, consumption,unemployment, inflation, savings, investment, international
trade and international finance. In contrast, microeconomics is primarily focused on the
actions of individual agents, such as firms and consumers, and how their behaviour
determines prices and quantities in specific markets.



Importance of macro economics to manager

1) Strategic investment decision
If your company is operating globally then it helps to determine production capacity in
different countries and anticipate the financial crisis and make strategic investment decision
throughout the subsidiary countries. So it imperative for the manager to know about Marco
economics.

2) By 1980 to 2001house price 3times house hold income, but after 2001 this ratio start
climbing to 4 times and screamed at 2004 it can be alarming for housing and construction
business and something is wrong in housing industry. If you are macro economics person and
manager for this industry, you can take good decision during this bubble. ( source youtube :
Sudesh Mujumdar)

3) government policies are not external factors and manager can study about the government
regulation and plan the business plan.
4) Anticipate the trade cycle
Manager should anticipate the trade cycle of this business and run his business. If it is boom
period the production used be increased but if the trough then he should minimise production
or it can be end of product life cycle. For existence he should shift to new market or change
or modify the product.



4) Inflation
If there is inflation in the market then company cost of production and cost of fund is high so
his product price can be higher so it might affect its price. so manager should understand
about inflation and change in price level.



conclusion
macro economics helps a manager to learn about national
income, output, consumption,unemployment, inflation, savings, investment, international
trade and international finance. What we can say is that it can helps manager to plan for
external factors basically Marco economics component. it is very much important for
manager to know about macro economics.