how does economic decison making affect global economy?
i study in classX cbse and this i dont get.
anyone help !!
- Aussies-OnlineLv 51 decade agoFavorite Answer
The global economy is only affected by 3 major things...
America interest rates and the value of its dollar.
The price of gasoline.
The price of gold.
When America has a strong dollar and the price of gasoline is high... it is enough to send the rest of the world into recession as we cannot afford either of them.
It is very important for every country to do what ever they can to not have their currency drop too far off the American dollar. They are the ones who need to make economic decisions to achieve this. Those who don't becomes second or third world countries.
This is the real reason why so many people hate America.
- 1 decade ago
Everybody is an economic decision maker. Every decision they make affects the global economy in some way.
I assume that your question is more pointed to the economic policies of governments. Every decision that governments make and every action they take also affect the global economy, but on a much larger scale. The unfortunate fact is that most government policies tend to reduce freedom, restrict trade and bring about results that are very different than what is inteded.
What is your background and what is your interest in economics?Source(s): Great information on everything to do with economics and freedom. Ludwig Von Mises Institute at www.mises.com Future Of Freedom Foundation www.fff.org Fraser Institute www.fraserinstitute.ca
- NCLv 71 decade ago
It's the other way around. The global economy, being very large, affects economic decision making. No single decision maker (not even the president of the United States or the prime Ministrer of Japan) can influence the global economy; it is too large for that...
- zingisLv 61 decade ago
If you're talking about individual choice, it affects it tremendously.
In the capitalist system consumption is the largest expenditure in the gross domestic product. If a large economy (like the US) has a situation where consumer confidence goes down dramatically, they will buy less, and their factories will produce less. The drop in production causes job loss and causes even less consumption. This leads to recession.
This affects the global economy by having imports drop (most of everything the American consumer buys is produced overseas) which causes a loss of production overseas, which causes job losses, which causes less spending in those countries, which leads to recession.
Just one of many examples