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Stock Market Operations

Notes Economic and industrial policies of the government
Debt recovery and loans outstanding
Interest rates

Cost of living index
Foreign investments
Trends in capital market
Stage of the business cycle

Foreign exchange reserves
The Global Economy

In a globalised business environment, the top-down analysis of the prospects of a firm must
begin with the global economy. The global economy has a bearing on the export prospects of
the firm, the competition it faces from international competitors, and the profitability of its
overseas investors.

Macroeconomic Analysis

The government employs two broad classes of macroeconomic policies, viz. demand-side policies
and supply-side policies.

Did u know? Traditionally, the focus was mostly on fiscal and monetary policies, the two
major tools of demand-side economics. From the 1980s onward, however, supply-side
economics has received a lot of attention.

Fiscal Policy

Fiscal policy is concerned with the spending and tax initiatives of the government. It is the most
direct tool to stimulate or dampen the economy.
An increase in government spending stimulates the demand for goods and services, whereas a
decrease deflates the demand for goods and services. By the same token, a decrease in tax rates
increases the consumption of goods and services and an increase in tax rates decreases the
consumption of goods and services.
Monetary Policy

Monetary policy is concerned with the manipulation of money supply in the economy. Monetary
policy affects the economy mainly through its impact on interest rates.
The main tools of monetary policy are:

Open market operation
Bank rate
Reserve requirements
Direct credit controls

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