Fundamentals of Macroeconomics
Edward Bravo
ECO/372
September 30, 2014
Al Gourrier

Fundamentals of Macroeconomics
Macroeconomics gives us an understanding of the economy we live in as depicted on a grand scale. In macroeconomics we learn that every type of action which occurs in our economy acts as a force which sets other aspects in our economy into motion. In this paper I will introduce three activities common in our economy which seem very different from one another while at the same time cause a ripple effect setting the next activity into motion.
The Purchasing of Groceries The purchasing of groceries may seem silly to include in a paper on the fundamental of macroeconomics, however, this activity probably occurs more often than the other activities in our economy which will be introduced further down. In order to explain how this activity fits into our subject, it is important to realize that the purchase of groceries is a result of the demand we have for the things that we purchase. The majority of items we purchase at a grocery store can be traced back to a country other than our own. For example, The Maps of World (2014) website shows a table illustrating Brazil as the number one ranked exporter of coffee. The choicest of wines can be traced back to France, Tilapia traced to China and so on. Efficiency, as well as prices and supply, would be adversely affected if the United States would attempt to produce these products, as well as many others, on our own soil. As consumers of these specific products, we set into motion the demand which allows the exporting countries to succeed in the free global market.

Groceries and Government Government is able to control which groceries we purchase not by telling us what to buy, but by implementing tariffs and quotas on the goods we like to purchase. As described by Colander (2013), a tariff can be imposed by the government to control the purchasing of foreign goods. Tariffs can be imposed by other governments other than U.S. government as well which can have an adverse reaction to our economy. For example, Gesenn (2014), with The Washington Post, reported that Russian President Vladimir Putin has issued a ban on all imports from Western countries. This ban on imports has caused supermarkets to greatly increase prices which in turn adversely affects Russian consumers.
Massive Layoff of Employees The great recession officially began on December 2007. As a result of this recession, which is when output falls below its potential, firms decreased output which resulted in the massive layoff of employees. This event marked the beginning of a circular downward spiral which led to the decrease in consumer income which in turn required that firms further decrease production. A few people losing their jobs does little to the economy. It is when this activity happens on a large scale that it begins to affect the economy. As a result of people losing their jobs, these once consumers could no longer afford to consume or live in the comfort zone in which they used to live. When the consumer’s income is lowered or completely cut off as a result of them being laid off, naturally they cut expenditures. When the consumer cuts expenditures, firms react by decreasing production which restarts the cycle with firms having to lay off more employees.

Decrease in Taxes The U.S. government relies on its collection of taxes to fund the many tasks and functions it provides. The collection of taxes is then the largest contributor to the income of the government. To my understanding, if the government were to lower taxes or at least not raise them further, it would provide the necessary break which could aid in the recovery of the economy’s current recession state. However, this would also mean that the government would reduce its own salary. However, if the government were to decrease taxes this would mean that the organizations that rely on government funding would take a hit in salary or donations along with the government. Services other than Social Security and Medicare that would suffer from a decrease in taxes, according to OpposingViews.com (2014), are public transportation, emergency services and law enforcement as well as many others.
Conclusion
As discussed and illustrated above, every choice made within the economy drives the direction of the economy, and the direction in which the economy is going drives our choices. From shopping at the grocery store to being laid off or laying employees off ourselves, every action in the economy causes a reaction which continues to shift our economy in the direction dictated by the previous actions.

References
Colander, D.C. (2013). Economics (9th ed.). Retrieved from The University of Phoenix eBook Collection database..
Gesenn, M. (2014, August). Food import ban means Russia is fully at war with the West. The Washington Post, (), 1.
Maps of World. (2014). Top 10 Coffee Exporting Countries by Production. Retrieved from http://www.mapsofworld.com/world-maps/top-coffee-exporting-countries.html OpposingViews.com. (2014). Services Your Community Provides That Are Funded by
Taxpayers. Retrieved from http://people.opposingviews.com/services-community-provides-Funded-taxpayers-8221.html