BUSINESS ECONOMICS

Business Economics

Business Economics

Introduction

Economics is an approach to business reality understood from an in- comprehensive approach, addressing both understanding the internal mechanisms that move as their relationships with society. The business world is present daily in the media, is part of the lives of millions of workers and affects all households. On the other hand, the enterprise is a constantly changing, adapting to successive social, technological, political and so on., innovations that in turn generate social progress, but also disadvantages and uncertainties should be evaluated in each case. Understand the logic of business decisions with near vision and founded, values and its consequences from a social, ethical and environmental factors promoting use of information technology and communication, is the overall purpose of this matter (Marshall, 1930, pp. 110-112).

Discussion

Macro Economics

The term macroeconomics refers to study of the behaviour of an economy as a whole or as a system; the phenomena explained are (1) the short-run level of economic activity—the levels of national output, income, and employment; (2) the causes of short-run fluctuation in economic activity (business cycles); and (3) the long-run growth rate of an economy. This chapter focuses on the first two aspects of macroeconomics. The models are presented in an approximate chronological order; the chapter's organizing theme is that modern macro-economic models can be seen as based on one of two competing “visions” of the economy: (1) The economy is seen as stable, with strong market forces pushing it toward an equilibrium level consistent with full employment of labour and capital (as in the classical and new classical models), or (2) it is seen as an unstable system that grows through time in a boom-bust pattern, with its normal state being less than full employment and so less-than-potential output being produced (as in Keynes's and the Keynesians' models) (Arestis, and Sawyer, 2002a, . pp. 529-546).

The Beginning: Keynes's Critique of Classical Economics

Macroeconomics as a distinct field within economics emerged in the late 1930s as a response to John Maynard Keynes's General Theory of Employment, Interest and Money (1936/1973, referred to subsequently as GT). Keynes contrasted his views on the causes of depressions and persistent involuntary unemployment with those of his predecessors, whom he termed the classical economists. In Keynes's view, these economists assumed that the normal condition for a market economy is one of capital-accumulation-fuelled growth with full employment of labour and capital, and that periods of high unemployment were rare and temporary deviations from the norm. Keynes wrote that this assumption is empirically incorrect because economies frequently experienced prolonged periods of high unemployment and below-potential output (recessions or depressions). He presents his model by developing a critique of three dimensions of the classical theory: (1) Say's law, (2) the quantity theory of money, and (3) continual clearing of the labour market at “full employment (Davis, 2007, p. 275-290).

Keynes's informal model (informal meaning that he did not specify his model with a series of equations or represent it with a set of diagrams but, rather, mainly used verbal exposition) begins by seeing the classical economists as having all held the ...