Fundamentals of Macroeconomics
Economic activities affect the government, households and businesses every day. They all have a different effect and some can be very different from one scenario to the next. Here I will explain how the purchase of groceries, layoffs and decreases in taxes affect them. I will also explain how the flow of resources runs from one entity to the other.
Buying groceries is something we all must do unless we are lucky or unfortunate enough to be fed by someone else or an institution. The amount we spend on them and the frequency we purchase them affect the government in a few ways. It affects the amount of taxes they will place on food in some states and it also can help the government earn revenue if they are taxed.
Households are affected by purchasing groceries because it is an absolute necessity. If a household meets certain criteria the government will allot a certain amount of assistance for a family. The cost of the groceries which can be affected by inflation and change in the economy also weighs very heavy in the grocery consumer.
Businesses, in this case being grocery stores are affected by the way and amount of groceries people buy. They are affected by competitors pricing and the amount of shoppers that frequent the store. The location of the business also affects how well it will do and the pricing of the products.
All of these three entities are related and affect one another in large ways. They all are dependent on the outcome and situation of others. For instance when the government raises taxes households on a fixed or tight income will have to cut back on their grocery budget which affects the stores sales and price per unit of products. Recently, in Nevada, the food stamp budget and amount per person changed. This means households that do not have any extra money to spend on groceries are spending less and the stores and government are suffering the outcome...