Macro Economic Indicators

For long I want to write about GDP, Recession,L-V-(and now W) shaped economy and my class in IIM give me good fundamental to blog here in this post.




Why the business magnets always look for RBI,Finance minister speech.Why the corporate world make unnecessary hulla-bulla (necessary for them of course!) before the policy speech.


They are not listening to John F. Welch's speech or focusing for any new gyan.What are these folks looking for?



To get an answer to this question we need to know what economic environment means.There are two level 1.At Micro level 2.At Macro level


Micro level/Firm level details means we are restricting ourselves to only certain level normally firm and its surrounding market.Here managers are concerned about decision making by looking at the current prices,competitors and general enviornment.How to increase efficiency,how to reduce price,how to make use of economies of scale etc are PRIME consideration here.So any decisions made in this case will be with some "beliefs"

• 1.Demand will be stable
• 2.Interest rate,Currency conversion rate,tax rate will be stable
• 3.There will be stability in Prices

Now how accurate and "given" are the above beliefs?



Here comes the need of Macroeconomics.Macroeconomics deals with all in Total! It talks about aggregate demand,supply.It defines and analyse GDP,GNP,inflation,Recession.Thus for a government Macroeconomics is of utmost important to see country's growth plan.Thus what come out of RBI and Finance ministry is nothing but decision and policies about guiding these variables.Hence for industries to function in some given "certians" they need to CAREFULLY listen to govt folks...they need to listen to them to make sure their "certain" and "givens" are indeed true.RBI/Govt policies will give them guidance on interest,exchange rates, aggregate demand etc which will guide the corporate to take better decisions and shape the long term strategy


So you now know what government can do to get our salary hiked and there by making us to spend more therby making the demand hing therby giving companies a reason to produce more giving a healthy ECO-nomic system. But will it work like detailed above? Will it "screw" the system than helping it? Lets see in next post with some examples!