Macroeconomic Principles
Michael Bame’s article on fixed-price contracts demonstrates the macroeconomic principle of price stability and inflation, which reflects the importance of regulating and controlling inflation to avoid and prevent the economy from Negative consequences of economic recession. Through various contracts type, the prices of the contracts are kept constant with the rise in the cost of the contracts equaling zero. Through this, the market can control the increase in value, leading to increased interest rates on the project, causing the prices to go up affecting macroeconomic due to high inflation and national productivity, leading to a recession where products become expensive.
Mike Moffatt’s article talks about sustaining the macroeconomic aspect of economic output, which affects the macroeconomics of a country (Rode, 2012). Economic output can become regulated through different measures and policies, which eventually change various microeconomic principles, which in turn affect the way the economic and trade is carried out. It also affects the microeconomic of the country by income regulations. Through monetary policies, economic out is generally influenced by minimizing a certain out and increasing another.
Also, the article about understanding the stock market by Mike Moffatt addresses the issue of interest rates in the macroeconomic of a country. It demonstrates the effect of interest rates on microeconomics and investments. When interest rates are high, investments reduce, which also affects employment, creating more levels of unemployment and impacting economic growth negatively (Rode, 2012). Similarly, the microeconomic aspect affected is the income levels of individuals. High-interest rates affect business profits and prices of commodities, causing the access of money in banks to inform of loans difficult, limiting the macroeconomic in terms of national inputs from the high cost of production and products and affecting the balance of payments.
Reference
Rode, S. (2012). Advanced macroeconomics. Bookboon.