Business Economics
ECON 545
Professor Ermias Weldemicael
Week 6
Macroeconomic Analysis
Situation B
William Samarin
August 15, 2014

Situation B

Introduction

In situation B, Cindy wants to start her own business where she installs solar panels. She has based her choice on what she perceives as the economic benefit of the cost savings of solar, both for businesses and homeowners plus the positive environmental impact of using solar. She has also heard that both the state and Federal government is offering incentives and rebates for the installation of solar panels to aid in the purchase of a solar system. The macroeconomic impact of her business decision needs to look at the effect of the solar industry on the gross domestic product of the United States, unemployment in the field, the fiscal policy impact, business cycles in the industry, and monetary policy and interest rates as well the international trade impacts of solar installations. Without an understanding of these areas, starting a new solar installation business could be a risk.

Gross Domestic Product and Solar

Gross domestic product is the market value of the final commodities and services that are produced by any country during a specific time period. In most cases this is measured over a single year (Hubbard, 2012). The gross domestic product (GDP) impact of the solar energy industry is seen in the creation of jobs in the specialized production of solar panels, the installation of solar systems and the low cost energy created by solar systems. The current increase in solar use world-wide has been a positive impact on the United States’ GDP. There could be an adverse impact and slight lowering of GDP if government regulations requiring a lower CO2 level from current energy sources are enacted. Meeting lower carbon emissions standards comes at a cost of higher utility prices and a