F1 MacroEconomic

8/6/2019 F1 MacroEconomic

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F1/FAB ACCA (2011-2012)

Ac ants in

B iness

READ CAST by Hafiz Muhammad Adnan Rana

The Student College at Sialkot (StuCo)

0346-538-8-538


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The Macro-Economic Environment

2. Macro-economic factors

a) Define macro-economic policy.[1]

b) Explain the main determinants of the level of business activity in the economy and how

variations in the level of business activity affect individuals, households and businesses.[1]c) Explain the impact of economic issues on the individual, the household and the business: [1]

i) inflation

ii) unemployment

iii) stagnation

iv) international payments disequilibrium.

d) Describe the main types of economic policy that may be implemented by government and

supra-national bodies to maximise economic welfare.[1]

e) Recognise the impact of fiscal and monetary policy measures on the individual, the

household and businesses.[1]

Business Context

Macroeconomic factors affect all aspects of managing organizations as the

economic climate alters consumers demand requirements as well as the price

and availability of raw materials and the labour force. Newspaper reading is

encouraged at this stage (www.br.com) Business Recorder Newspaper

Qualification Context

An understanding of this topic will assist with P3 (Business

Analysis). But we must appreciate that we are accountants not

Exam Context

Macro-economic factors might be considered a peripheral part of

the syllabus, but the pilot paper contained nine marks for


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ECO2NOMICS

The study of production, distr

Q Injecti

ConsumB InvestmC Investm

D Consum

is bad

ibution and consumption of goods and servi

ns into the economy are:

ption and Investmentnt and Government Expenditure

ent, Government Expenditure and Export Deman

ption, Investment, Government Expenditure and

es.

d

Export Demand


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Gross domestic product (GDP) is defined as "the value of all final goods and services produced in a country in 1 year"

Gross National Product (GNP) is defined as "the market value of all goods and services produced in one year by labour and property supplied by the residents of a country."

National income and output (Billions of dollars)

Period Ending 2003

Gross national product 11,063.3

Net U.S. income receipts from rest of the

world55.2

U.S. income receipts 329.1

U.S. income payments -273.9

Gross domestic product 11,008.1

Private consumption of fixed capital 1,135.9

Government consumption of fixed capital 218.1

Statistical discrepancy 25.6

National Income 9,679.7

NDP/NNP : Net domestic product is defined as "gross domestic product (GDP) minus depreciation of capital"

GDP per capita : Gross domestic product per capita is the mean value of the output produced per person, which is also the mean income.


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The branch of economics tha

economy as a whole.

Macroeconomic is concerned

Everyone

I Inflation rate

S Spending (National Expen

G Growth of GDP

N National Economic Trend

P Productivity Levels (factor

deals with the performance, structure and

with followings:

outside of Pakistan asking single question I

itures)

s of production)

2. Macro conomic factors

a) Define macroeconomic policy.[1]

d) Describe the main types of economic policy t

government and supra-national bodies to maxi

ehavior of the

S GNP FIT ?

hat may be implemented by

ise economic welfare.[1]


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F Foreign Exchange rates

I Interest rates

T Tax rates

Government of Pakistan will have similar macroeconomic aims:

Economic Growth (people have happier life)

Low Inflation

Low Un-employment

Balance of Payment (Stable Foreign Exchange Rates, Dr and Cr of National Accounts

equal)

SADLY Pakistan is like a CAGE for investors to invest money.

S Supply of Finance (House, Car, CAPEX)

A Aggregate Demand (Business, Individual, Household)

D - Advancement in Factors of Production (Skills and Education Level HSBC)

C Confidence (Vicious Circle Fear of losing job will Preference Theory)

A Awareness (Exhibitions)

G Government Policy (Spending, Contraction)

E Exchange rate movement (Pak Rupee getting stronger or weaker)

2. Macro-economic factors

b) Explain the main determinants of the level of businessactivity in the economy and how variations in the level of

business activity affect individuals, households and


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a

Which one of the following would cause a fall in th

n economy.

decrease in the level of imports B all in th

Decrease in Govt Spending D Decrea

level of aggregate demand in

e propensity to save

se in income tax

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F1 MacroEconomic