ABSTRACT

In this chapter, the composition of the macroeconomic environment which has significant influence on the practices of business firms in the market is elaborated and discussed. In particular, the implications on the practices of the hospitality industry are elucidated. Among the various macroeconomic principles, aggregate demand and aggregate supply which are commonly used to examine changes in macroeconomic phenomena such as total output, inflation and unemployment are first given an introduction. The impacts from their interactions on the changing macroeconomic equilibrium are also discussed. Then, the characteristics of business cycles and their effects on the spending decisions of consumers are investigated. The related significance to the business and investment decisions of firms in general and in the hospitality industry is also explained. Moreover, the economic connotations and consequences of government participation in an economy through fiscal policy are elaborated (monetary policy will be discussed in the next chapter). Finally, support for and opposition to the tide of regionalization and globalization, and some related evidence as found in the hospitality industry are explored. Keywords: aggregate demand; aggregate supply; business cycle; fiscal policy; gross domestic product; hospitality industry; inflation; regionalization and globalization; unemployment