Macro-Economics Macro Economics There Are Term Paper

  • Length: 24 pages
  • Sources: 30
  • Subject: Economics
  • Type: Term Paper
  • Paper: #6508748

Excerpt from Term Paper :

In other words, these companies expand their business, reach a peak in their business activity, and then go through a period of recession, followed by a period of business expansion, and so on.

It is important that companies understand that the economic sector they represent follows the same business cycle. Therefore, it is difficult for companies to expand their business during periods of recession in the economic sector they represent. But they can expand their business during recession periods of other business sectors, represented by products from indirect competition. This situation can be observed in McDonald's situation.

This can be an explanation of the fact that the company's sales have significantly increased during the crisis. The incomes of most people have been reduced, which means that their purchasing behavior has modified. In such cases, people usually spend less. This means that they purchase less, or they purchase cheaper products. In the case of the restaurants industry, it is obvious that these people cannot afford to eat out in traditional restaurants as much as they used to before the crisis. McDonald's provides a cheaper way of eating out. The smaller prices of the fast food chain in comparison with traditional restaurants have attracted the customers that cannot afford to eat in such restaurants. This situation has determined the sales of McDonald's to increase.

Another idea refers to employment and its influence on the fiscal and monetary policies. Some of the government's strategies are oriented towards reducing unemployment. The level of unemployment determines the government to focus on measures that stimulate jobs development. Such measures refer to modifying interest rates in order to control the money supply and to increase employment levels. The level of taxes can also be influenced by these measures. This is an important issue that affects the activity of McDonald's. If taxes increase, the company's profits are likely to reduce.

Financial Evaluation

The analysis of the financial situation of McDonald's reveals the fact that this is a profitable company. The company's revenues have increased by 27%, reaching $22.8 billion. Its operating income increased by 9%, reaching $3.9 billion. This reflects the fact that McDonald's is characterized by a strong financial situation that allows the company to expand its business.

Other indicators that can reveal the financial situation of the company is represented by its recruitment and selection process. In other words, if companies are hiring employees it means that they are developing, they are expanding their business, and their increased incomes allow them to hire people. If companies are reducing their number of employees, this situation reflects the fact that incomes are reduced and the company in case is not able to pay the salaries of their employees.

In the case of McDonald's it is difficult to make evaluations based on this indicator. This is because the different types of ownership do not allow to develop a correct idea of its human resources situation. The situation of McDonald's franchisees and affiliates does not reflect the situation of the corporation owned restaurants. It is important to establish the evolution of the human resources in the restaurants owned by the company, and not in those owned by its partners.

Reference list:

1. Annual Report (2011). McDonald's. Retrieved May 23, 2012 from

Macroeconomic Indicators

1. GDP

Consumer spending = $1,000

Government expenditures = $300

Investments by industry = $150

Excess of exports over imports = $200

GDP formula:

GDP = consumer spending + government expenditures + investments by industry + excess of exports over imports

In this case, the GDP = $1,000 + $300 + $150 + $200

GDP = $1,650

2. If the domestic energy production is increased, this leads to reduced oil imports from other countries. In this case, the excess of exports over imports increases, which means the GDP increases with this number.


1. CPI1 = 100

CPI2 = 104

Rate of inflation formula:

Rate of inflation = ((CPI2-CPI1)/CPI1)*100

In this case, the rate of inflation is:

Rate of inflation = ((104-100)/100)*100

Rate of inflation = 4%

2. CPI1 = 231

CPI2 = 234

Rate of inflation = ((234-231)/231)*100

Rate of inflation = 1.2% or 0.012

Unemployment rate

1. Total workforce = 20,000

Unemployed people = 2,000

Unemployment rate = (number of unemployed people / number of people in the civilian workforce)/*100

In this case, unemployment rate = (2,000/20,000)*100

Unemployment rate = 10%

2. Total workforce = 20,000

Unemployed people = 2,000, of which 500 are not looking for work. Unemployed people must be looking for work in order to be considered unemployed. In this case:

Unemployed people = 2,000 -- 500 = 1,500

Unemployment rate = (number of unemployed people / number of people in the civilian workforce)/*100

In this case, unemployment rate = (1,500/20,000)*100

Unemployment rate = 7.5%

International Economic Trends

1. Output and Growth real GDP

In 2008, the UK had the highest increase in the real GDP, followed by Canada, the U.S., and Japan. The crisis has affected these countries that reported significant changes in their GDP. In other words, their GDP has reduced in 2009 in comparison with 2008. Therefore, in 2009 the highest GDP reduction was reported by Japan, followed by the UK, the U.S., and Canada. The most important changes between 2009 and 2008 were reported by Japan and the UK. The smallest change was reported by Canada. In 2010, Japan had the highest GDP increase, followed by Canada, the U.S., and the UK. In other words, Japan had the most important recovery from the crisis. In 2011, Japan has reported the most important reduction of GDP. The highest GDP increase was reported by Canada, followed by the U.S., and the UK.

2. Inflation and prices

In 2008, the highest increase in the consumer price index was reported by the U.S., followed by the UK, Canada, and Japan. In 2009, the CPI has significantly reduced in the case of these countries (Economic Research, 2012). The most important reduction can be observed in the case of Japan. The smallest CPI reduction was reported by the UK. Canada and the U.S. have reported CPI reductions similar to that of Japan. In 2010, the situation improved a little in the case of these countries, because they were able to increase their CPI. However, their progress was significantly influenced by their CPI in 2009. Therefore, in 2010 Japan reported the highest CPI increase. The UK reported the highest CPI increase. Canada and the U.S. have reported CPI increases slightly smaller than that of the UK.

3. Labor markets

In 2008, Canada was the country with the highest employment rate. Japan had the smallest employment rate. The U.S. And the UK has a slightly higher employment rate in comparison with that of Japan. It seems that the employment rate of these countries was affected in 2009 by the crisis. In this case, the U.S. had the most important employment rate reduction, followed by the UK, Canada, and Japan. The situation has improved in 2010. The highest increase in the employment rate was reported by Canada. The U.S. And Japan have reported smaller employment rate increases. The UK reported the smallest employment rate increase. In 2011, the employment rate in Japan has significantly reduced, but the employment rate in Canada, the U.S., and the UK were not significantly affected.

Treasury bonds

1. The differences in rates among these bonds are determined by maturity risk premiums and liquidity risk premiums. The risks associated with treasury bonds increase in accordance with the time they must refer to. In other words, it is difficult to determine the liquidity of the country in longer periods of time.

2. The false statement is:

a) the default risk premium is applied to all bonds including U.S. Government ones.

This is because the U.S. Government does not pay such default premiums.

3. The inflation premium that should be required by investors is:

Inflation premium = nominal rate -- real rate + risk premium

In this case, the inflation premium = nominal rate -- 4%

4. In case the inflation rate is 0%, the yield curve is likely to have a constant slope because of the constant level of inflation.

Reference list:

1. International Economic Trends (2012). Economic Research. Retrieved May 24, 2012 from

McDonald's and Macroeconomic Indicators

1. The selected company is McDonald's and it provides fast food products in a large chain of restaurants. In order to understand how these macroeconomic indicators affect the performance of the company, it is important to take into consideration the fact that the indicators in the U.S. must be analyzed with the indicators of some of the most important countries that McDonald's has opened restaurants in.

The indicators used in this analysis are represented by GDP, CPI, and unemployment rates. These are some of the most important indicators that can provide a correct idea of the national economy of different countries, and that can have significant effects on the activity of companies in these countries. In other words, such indicators and their evolution…

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