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Macroeconomic Impact on Business Operations

Monetary and fiscal tools are used by the government to control economic conditions in the country. Monetary policy usually targets money supply in the market in order to control inflation. In some countries such as Russia and Brazil, governments may often force the mints to print extra currency to meet various expenses. This results in higher flow of money in the market which is unsubstantiated by gold reserves of that country. That leads to inflation and causes several problems due to macroeconomic instability.

However when inflation is kept in check, prices stay within consumer's reach, money market remains stable and other areas such as employment, interest rates etc. However while monetary policy is more dependent on market forces and consumer behavior, fiscal policies include governmental spending, taxation and interest rates. We must understand that fiscal measures are normally utilized in capitalist countries when economic conditions are beyond the control of normal market forces and when government intervention is desperately required. In some countries of the world, including Japan, fiscal measures play extremely important role in the economy whereas USA has been somewhat reluctant to make use of fiscal policies.


While pricing discrimination is helping commercial airlines stay profitable during economic downturn, Brock (2000) contends that this type of pricing may actually be hurting the consumers for they revenues far outstrip the costs:



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Approximate Word count = 1574
Approximate Pages = 6 (250 words per page double spaced)


  

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