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MANAGING PROJECTS

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Projects represent nonroutine business activities that often have long-term strategic ramifications for a firm. In this chapter, we examined how projects differ from routine business activities and discussed the major phases of projects. We noted how environmental changes have resulted in increased attention being paid to projects and project management over the past decade. In the second half of the chapter, we introduced some basic tools that businesses can use when planning for and controlling projects. Both Gantt charts and network diagrams give managers a visual picture of how a project is going. Network diagrams have the added advantage of showing the precedence between activities, as well as the critical path(s). We wrapped up the chapter by showing how these concepts are embedded in inexpensive yet powerful software packages such as Microsoft Project. If you want to learn more about project management, we encourage you to take a look at the Web site for the Proj...
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Macroeconomics – Fiscal, Monetary and Supply-Side Policy

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The three main policies used to affect economic activity are monetary policy, fiscal policy and supply-side policy.
Keynes developed The General Theory as a response to the mass unemployment which existed in the 1930s.
He advocated governments intervene to boost demand through influencing aggregate demand.
The Keynesian cross diagram shows how the economy can be in equilibrium when E = Y.
This equilibrium may not be sufficient to deliver full employment output and so the government can attempt to boost demand to help achieve full employment.
Supply-side policies aim to improve the efficiency of the economy and increase the capacity of the economy by shifting the aggregate supply curve to the right.
Key elements of a supply-side policy include tax and welfare reforms, improving the flexibility of labour markets including trade union reform, education and training, and investing in improved infrastructure.
In developing a theory of short-run economic fluctuations, Keynes proposed the theory of liquidity preference to explain the determinants of the interest rate. According to this theory, the interest rate adjusts to balance the supply and demand for money.
An increase in the price level raises money demand and increases the interest rate that brings the money market into equilibrium. Because the interest rate represents the cost of borrowing, a higher interest rate reduces investment and, thereby, the quantity of goods and services demanded. The downward sloping aggregate demand curve expresses this negative relationship between the price level and the quantity demanded.
Policy makers can influence aggregate demand with monetary policy. An increase in the money supply reduces the equilibrium interest rate for any given price level. Because a lower interest rate stimulates investment spending, the aggregate demand curve shifts to the right. Conversely, a decrease in the money supply raises the equilibrium interest rate for any given price level and shifts the aggregate demand curve to the left.
Policy makers can also influence aggregate demand with fiscal policy. An increase in government purchases or a cut in taxes shifts the aggregate demand curve to the right. A decrease in government purchases or an increase in taxes shifts the aggregate demand curve to the left.
When the government alters spending or taxes, the resulting shift in aggregate demand can be larger or smaller than the fiscal change. The multiplier effect tends to amplify the effects of fiscal policy on aggregate demand. The crowding-out effect tends to dampen the effects of fiscal policy on aggregate demand.

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