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MACROECONOMICS VARIABLES 1

8-1 Final Project Part II Milestone: Overview and Macroeconomics Variables

RaTrina Britton

Southern New Hampshire University


MACROECONOMICS VARIABLES 2

This macroeconomic analysis paper is an overview of three macroeconomic variables and

how they affect the annual demand and supply Pampers, a product of Procter and Gamble. The

three macroeconomic variables in the United States being analyzed are; the growth of the Gross

Domestic Product (GDP), unemployment and inflation. GDP is an important determinant of the

health of a country. It is the sum of all goods and services offered for a specific time such a year.

GDP growth will represent the changes in the countrys productivity and the impact on the

supply and demand of Pampers over a four years period.

In order to determine how each macroeconomic variable, affect the sales of Pampers, I

compute the percentage growth of sales and GDP over the three years period and compare it with

the rate of inflation and unemployment. Because of its great importance to the country, increase

in sales is expected to result to growth in sales revenue. On the other hand, increase in inflation

and unemployment rates are expected to result into decline in sales revenue.

It is important to ensure the different variables are at appropriate levels and that the

companies perform appropriately. By looking at the net sales revenue for Procter and Gamble

over the past three years, it is possible to understand how they impacted by the macroeconomic

variables of GDP, inflation rate, and interest rates. First, I will make use of the multiple excel

regression to determine their relationship as denoted by the correlation coefficient.

From the regression analysis, it can be shown that net sales revenue generated by Procter

and Gamble are directly related to the GDP as a major macroeconomic variable and at the same

inversely related to inflation rate and interest. This is because of the positive and negative

correlation coefficient respectively (AUBURN University, 2017).

The GDP growth of United States, greatly affect the companys performances of Procter

and Gamble and other companies operating in different sectors. The GDP growth represents the
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productivity of the general economy and is very important on the general wealth generation

within the entire economy. Company performs better when the status of the economy is good and

the reverse happens when the economic conditions is doing badly (Koba, 2011). Whenever the

economy grows, it is assumed that wealth is created to several households who in turn will have

more purchasing power. GDP growth increases productivity and consumptions hence resulting

into increased sales for Pampers.

The inflation rate represents the rise in the cost of living and has negative impacts on the

sales revenue. Increase in the rate implies the reduction in the customers purchasing power

hence companies will record reduction in the sales revenue. This is the case of Procter and

Gamble as shown by the negative correlation coefficient. From the analysis for the

macroeconomic variables to be appropriate for investors to operate well. The expansion in the

GDP of any country is a good indicator of proper operating and investment environment. It is

important for the policy makers to put policies in place to achieve desired economic conditions.

Both the monetary and fiscal policies are measures by government to control and regulate the

activities of the economy to ensure there are low levels of unemployment and stable prices.
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References

AUBURN University., (2017). Macroeconomic Variables. Retrieved from

http://www.auburn.edu/~gadzeat/macro-variables.htm

FRED., (2017). Gross Domestic Product (GDP). Retrieved from

https://fred.stlouisfed.org/series/GDP#0

Koba,M., (2011). Gross Domestic Product: CNBC Explains. Retrieved from

http://www.cnbc.com/id/44505017

Roubini, N.,(nd). Understanding the World Macroeconomy. Retrieved from

http://people.stern.nyu.edu/nroubini/NOTES/HAND6.HTM