Micro/Macro Effects

• Demand/Supply Shifts


  1. Micro Causes: Changes in consumer preferences, technological advancements

  2. Micro Effects: Price changes, quantity adjustments

  3. Macro Causes: Fiscal policies, global economic trends

  4. Macro Effects: Inflation/deflation pressures, impact on GDP
• Government Intervention Policies


  1. Micro Causes: Market failures, externalities

  2. Micro Effects: Altered firm behavior, efficiency changes

  3. Macro Causes: Economic stabilization, public goods provision

  4. Macro Effects: Employment levels, economic growth
• Price Volatility


  1. Micro Causes: Supply disruptions, speculative trading

  2. Micro Effects: Changes in firm profitability, consumer choices

  3. Macro Causes: Commodity price shocks, exchange rate fluctuations

  4. Macro Effects: Inflation rates, trade balance adjustments
• Competition vs Concentrated Market

  1. Micro Causes: Mergers/acquisitions, barriers to entry

  2. Micro Effects: Pricing power, consumer surplus changes

  3. Macro Causes: Regulatory environment, technological changes

  4. Macro Effects: Industry innovation rates, market efficiency
• Monopoly Regulation


  1. Micro Causes: Natural monopolies, lack of competition

  2. Micro Effects: Higher prices, reduced consumer choice

  3. Macro Causes: Antitrust laws, political pressures

  4. Macro Effects: Economic equity, market access
• Privatization/Deregulation/Nationalization


  1. Micro Causes: Efficiency goals, cost reductions, welfare maximisation

  2. Micro Effects: Organizational restructuring, market entry

  3. Macro Causes: Ideological shifts, fiscal pressures

  4. Macro Effects: Economic diversification, government revenue
• Labor Market

  1. Micro Causes: Wage negotiations, skill levels

  2. Micro Effects: Employment terms, labor supply

  3. Macro Causes: Demographic changes, education policies

  4. Macro Effects: Unemployment rates, productivity levels
• Inequality/Poverty


  1. Micro Causes: Income disparities, access to resources

  2. Micro Effects: Consumer spending patterns, savings rates

  3. Macro Causes: Fiscal policies, economic cycles

  4. Macro Effects: Social stability, aggregate demand
• Business Growth


  1. Micro Causes: Market demand, competitive advantage

  2. Micro Effects: Scale economies, market share

  3. Macro Causes: Economic climate, investment rates

  4. Macro Effects: Job creation, GDP growth
• Growth, Unemployment, Inflation/Deflation


  1. Micro Causes: Productivity changes, cost pressures

  2. Micro Effects: Pricing decisions, hiring rates

  3. Macro Causes: Monetary policy, international trade

  4. Macro Effects: Economic stability, purchasing power
• Macro Policy


  1. Micro Causes: Policy anticipation, adaptive behavior

  2. Micro Effects: Resource allocation, operational adjustments

  3. Macro Causes: Fiscal adjustments, monetary interventions

  4. Macro Effects: Economic cycles, stability
• Free Trade


  1. Micro Causes: Comparative advantage, market access

  2. Micro Effects: Export/import ratios, firm competitiveness

  3. Macro Causes: Trade agreements, geopolitical shifts

  4. Macro Effects: Trade balances, economic integration, economic growth, current account
• Protectionism


  1. Micro Causes: Domestic industry support, employment preservation

  2. Micro Effects: Cost increases, limited choice, domestic producer revenue

  3. Macro Causes: Political pressures, economic retaliation

  4. Macro Effects: Trade wars, unemployment, inflation, govt finances
• Globalization


  1. Micro Causes: direct investment, multinational corporations

  2. Micro Effects: Competitive pressures, operational diversity

  3. Macro Causes: Technological advancements, liberalization policies

  4. Macro Effects: Economic convergence, cultural shifts
• Current Account


  1. Micro Causes: Trade volumes, forex transactions

  2. Micro Effects: Revenue flows, payment balances

  3. Macro Causes: Trade policies, currency strength

  4. Macro Effects: Exchange rate stability, international reserves
• Exchange Rate


  1. Micro Causes: Transaction demands, speculative trades

  2. Micro Effects: Import/export profitability, cost of capital

  3. Macro Causes: Interest rate differentials, economic indicators

  4. Macro Effects: Inflation control, capital flows, FDI, unemployment
• Development


  1. Micro Causes: Technology adoption, infrastructure investments

  2. Micro Effects: Productivity improvements, market entry

  3. Macroeconomic Causes: Policy initiatives, international aid

  4. Macro Effects: Human development indices, sustainable growth
• FDI (Foreign Direct Investment)

  1. Micro Causes: Market potential, resource availability

  2. Micro Effects: Corporate expansion, technology transfer

  3. Macro Causes: Economic openness, stability

  4. Macro Effects: Job creation, skills enhancement
• Competitiveness


  1. Micro Causes: Innovation, cost efficiency

  2. Micro Effects: Market dominance, brand strength

  3. Macro Causes: Educational systems, infrastructure

  4. Macro Effects: Export performance, economic resilience
• Financial Market Regulation


  1. Micro Causes: Risk management, market integrity

  2. Micro Effects: Investment behaviors, access to capital

  3. Macro Causes: Financial crises, compliance standards

  4. Macro Effects: Systemic stability, investor confidence
• Terms of Trade


  1. Micro Causes: Commodity prices, trade terms

  2. Micro Effects: Profit margins, cost structures

  3. Macro Causes: Exchange rates, global supply and demand

  4. Macro Effects: Economic welfare, purchasing power
• Main macro objectives

  • Economic growth
  • low inflation
  • low unemployment
  • stable Balance of Payments
• Extra Macro objectives

  • Improving government finances
  • reducing income and wealth inequality
  • improving productivity
  • environmental concerns