Economic Policies and How the Affect Businesses

In: Business and Management

Submitted By popepope
Words 448
Pages 2
Economic policies and how they affect businesses
Economic policy: refers to the actions that governments take in the economic field. It covers the systems for setting levels of taxation, government budgets, the money supply and interest rates as well as the labor market, national ownership, and many other areas of government interventions into the economy. Most factors of economic policy can be divided into either fiscal policy, which deals with government actions regarding taxation and spending, or monetary policy, which deals with central banking actions regarding the money supply and interest rates.
Fiscal policies: refers to the government's spending and taxation practices and impacts essentially every individual and business in the nation. Fiscal policy influences the, the size of your tax bill, the amount of money the average consumer can afford to spend via taxation. These fiscal policies can be divided into expansionary policies and tight policies * Expansionary policies: Refer to when businesses spend more than they take in from taxes and this is good for businesses because more government spending leads to more jobs for consumers or increased infrastructural investment e.g building roads. This is good for businesses because more individuals can afford their goods and services. Businesses would have greater sales while paying lesser taxes to government resulting in better net profits * contractionary policies: Refer to when government spends less and collect more taxes, meaning that businesses and individuals pay more taxes to government, contracts are scaled down and more workers are made redundant this is bad for businesses because demand may fall as a result of less disposable income meaning that consumers will not spend as much on goods and services. Monetary policies: Monetary policy is the process by which the monetary authority of a…...

Similar Documents

How Businesses Areaffected by Government Policy

...How businesses are affected by government policy Governments create the rules and frameworks in which businesses are able to compete against each other. From time to time the government will change these rules and frameworks forcing businesses to change the way they operate. Business is thus keenly affected by government policy. Key areas of government policy that affect business are: Economic policy A key area of government economic policy is the role that the government gives to the state in the economy. Between 1945 and 1979 the government increasingly interfered in the economy by creating state run industries which usually took the form of public corporations. However, from 1979 onwards we saw an era of privatisation in which industries were sold off to private shareholders to create a more competitive business environment. Taxation policy affects business costs. For example, a rise in corporation tax (on business profits) has the same effect as an increase in costs. Businesses can pass some of this tax on to consumers in higher prices, but it will also affect the bottom line. Other business taxes are environmental taxes (e.g. landfill tax), and VAT (value added tax). VAT is actually passed down the line to the final consumer but the administration of the VAT system is a cost for business. Another area of economic policy relates to interest rates. In this country the level of interest rates is determined by a government appointed group - the Monetary......

Words: 438 - Pages: 2

How Effective Were Mussolinis Economic Policies

...properties of landlords * People wanted an end to food shortages * Did not change enough very similar to the tsar * Positive: secret police abolished * Freedom of religion * Freedom of speech * Promise of an elected parliament—elections in future How did the Bolsheviks seize power in October 1917 * The Bolsheviks began to grow in popularity through newspapers propaganda ect * Formed their own army called the Red Guard * Following the kornilov revolt- (PG on back foot) and Bolshevik red army threw the PG out so Bolsheviks took a lot of credit * Red guard had resources good weaponry * Lenin knew they wouldn’t get in through constituent assembly so he acted before it then dissolved it link to next one How did the Bolsheviks consolidate their power? * Soviets throughout Russia supported the Bolsheviks and took over the cities in their aid * Dissolved the constituent assembly so there was no way they would be removed * By the end of 1917 all of Russia was soviet * Issued a number of decrees: decree on land, decree on unemployment insurance, December decrees, decree on political parties to remove opposition, decree to set up political plice how did Lenin win the civil war * The reds strengths were war communism- government taking peasants grain and factories and given to the army and left the whites with a lack of resources * Red army was led by Trotsky great leader inspirational speeches,......

Words: 1198 - Pages: 5

How Privacy Issues Affect Businesses

...CONTEMPORARY BUSINESS ISSUES – PRIVACY IN THE WORKPLACE How Privacy Issues Affect Businesses How Privacy Issues Affect Businesses The existing economic and business setting implies on-going efforts towards better understanding and dealing with the challenges of the modern era, which are characterized by the crucial need for making changes due to intense competition and ongoing global crisis’. As a rule, privacy rights are established by explicit regulations, laws or rules. Some privacy rights are relevant in the workplace and some don't. And even if there is no particular law, a right to privacy can be based on the legal common law notion of having a "reasonable expectation of privacy”, (Lippke, 1998). For employers and employees in the business industry, privacy concerns have become progressively more widespread in the workplace, and with the increased use of electronic resources, privacy at work is even more compound. Consequently, it is imperative that both supervisors and managers have a fundamental understanding of some of the more common privacy rights and issues that can arise, as well as the restrictions that may apply. Some of the more prevalent privacy issues that employees face are drug testing, email monitoring, personnel records, social security numbers, monitoring and eavesdropping, back-ground screening, and medical records. Because of these issues, there are quite a few areas of human capital management in which privacy rights are recognized.......

Words: 2173 - Pages: 9

Economic Policy

...Economic policy refers to the actions that governments take in the economic field. It covers the systems for setting interest rates and government budget as well as the labor market, national ownership, and many other areas of government interventions into the economy. Nature of Economic Policy The ideal economic policy, both for today and tomorrow, is very simple. Government should protect and defend against domestic and foreign aggression the lives and property of the persons under its jurisdiction, settle disputes that arise, and leave the people otherwise free to pursue their various goals and ends in life. This is a radical idea in our interventionist age. Governments today are often asked to lower the prices of others, to fix wages, to help some businesses get started and to keep others from failing, to encourage or hamper imports and exports, to take care for the sick and elderly, to support the profligate, and so on. Ideally government should be a sort of caretaker, not of the people themselves, but of the conditions which will allow individuals, producers, traders, workers, entrepreneurs, savers, and consumers to pursue their own goals in peace. If government does that, and no more, the people will be able to provide for themselves much better that the government possibly could. Concepts of Economic Policy: * Economic policy seeks to achieve objectives such a high rate of growth, a low and stable rate of inflation and high levels of employment *......

Words: 1263 - Pages: 6

How Successful Were Mussolini's Economic Policies Between 1922 and 1943

...How successful were Mussolini’s economic policies between 1922 and 1943? Mussolini’s had three key economic aims when he became the Duce in 1922, first to consolidate the political system, second to make Italy economically self-sufficient (Autarky) and lastly to provide the economic base for military might. These aims were desired to make Italy a great power, like Germany and France. However the economy of the Italy was effectively split into two eras, pre-world war two and during world war two, making many of these economic policies less effective and irrelevant after 1939. After 1922, Mussolini aimed all his policies, including his economic ones, to consolidate his power. Mussolini aimed to improve social and economic conditions for Italians across the nation – he wanted to appease the masses so that his grip on the nation would become far stronger. Mussolini aimed to fix the Lira at 90 for £1 and this was achieved in 1927 when the Lira was returned to the ‘Gold Standard’ and the exchange was fixed. Exports became more expensive and so smaller firms were undermined; they were the foundations of Italy’s economy and were being put on the back foot by Mussolini’s poor economic policies. Furthermore, serious deflation corresponding to a 20% wage cut meant that firms and consumers were both struggling financially and consequently, the standard of living across Italy diminished greatly. The great extent to at which the quota 90 failed is exemplified by the decision to devalue......

Words: 1187 - Pages: 5

How Succesful Were the Nazi Economic Policies in the Years 1933 - 1945?

...During the years 1933 – 1945, Hitler and the Nazi party introduced various policies in which impacted the economy, is it necessary to label them all a success? The most successive policy that they announced was those in which was led by Albert Speer, this had a great influence on both the economy and the final stages of war; despite Germany being unsuccessful. The first policy that was introduced was the “New plan” which was created by Hjalmar Schacht in the year 1933. Schacht intended to reduce imports, reduce unemployment, create agreements with other nations and finally channel the government’s spending. In some perspective, the “New plan” was a success; unemployment had decreased significantly, it was reduced from 6 million in 1933 to 300,000 by 1939. Moreover, industrial production had rose considerably in comparison with Weimar Germany before the Wall Street Crash. Due to these factors, it can be interpreted as a great success however, there are features that hinder it. Firstly, Germany were still importing a huge amount of their produce, they failed to produce the same amount of money that they were spending; by 1939 the German government were in debt of 40 million Reichmarks. As a result of this, the new plan cannot be labelled as a great success, however there were aspects that influenced the success of other policies. As the war drew closer, Hitler was aware that the country was not prepared for confrontation therefore he advised his Nazi associate – Goering,......

Words: 994 - Pages: 4

Small Businesses in the Economic Development

...Introduction Even though small businesses in Zambia may not generate as much money as large establishments, they are a very important component of and a major provider to the strength of the Zambian local economy .This paper discusses the roles of small businesses in the economic development of Zambia. It aims to shed light on some of the challenges faced by most Zambian entrepreneurs as well as explain how entrepreneurs can develop for themselves a competitive advantage. It will further go on to identify and explain some entrepreneurial characteristics of our local entrepreneurs, while finally shedding light on how business opportunities are created. Role of Small Businesses in Zambia’s Economy According to the June 2010 Zambian Business Survey, it was noted that 80 % of the private sector in Zambia are small businesses with less than 50 employees. “These firms constitute the bulk of private sector employment in Zambia, employing 73% of the total labor force”. (Conway and Shah, JUNE 2010). Small businesses such as car washes, Beauty parlors, restaurants and small scale farmers open way for new employment opportunities and serve as building blocks of Zambia’s largest establishments. Not only do these small businesses offer employment opportunities, they also in turn assist in addressing some of Zambia’s key economic challenges such as Poverty reduction as well as increasing Government revenue collection. Additionally, small businesses in the agricultural sector......

Words: 992 - Pages: 4

How Do Certain Economic Factors Affect Stock Prices?

...How Do Certain Economic Factors Affect Stock Prices? Introduction For our analysis, we chose to examine how different economic factors such as GDP, CPI, and unemployment affect stock prices. More specifically, we analyzed how these economic factors affected the stock prices of three different companies during the period from 2000-2009. The three companies that we chose were Exxon Mobil, Tiffany & Co, and Southwest Airlines. We chose those particular companies because each one offers products or services that represent a different degree on the price elasticity of demand spectrum. Exxon Mobil represents a company that offers a good which is inelastic. This means that no matter what economic conditions are present in the market, the quantity demand for this product is going to stay constant since consumers feel they cannot live without it. On the other hand, Tiffany & Co. represents a company that sells products which are elastic. This means that consumers will choose to buy their products depending on the conditions present in the market. Southwest Airlines represents a company that offers a service which can be viewed as both inelastic and elastic depending on the type of travel being studied. For business travelers who are required to fly for their jobs, the service that Southwest Airlines provides is inelastic since they generally have no choice in whether they fly or not. On the other hand, there are travelers who view......

Words: 2061 - Pages: 9

How Successful Were Stalin's Economic Policies

...How successful were Stalin's economic policies? Stalin introduced the Five Year Plans and collectivisation as his economic policies to improve Russia's industrial backwardness. Collectivisation consisted of state controlled farms, as 90% of the produce would go to the state. The peasants would join their small individual plots to form communal farms, leading to larger amounts of food. The five year plans were aimed at industrial improvements in agriculture and factories. In purely economic terms, his policies were a success they provided a number of solutions to problems like the state's inability to afford to pay high prices for grain. The Five Year Plans built vast factories in places like Stalingrad, Leningrad and other cities across Russia. These improved the production output a lot with coal production jumping from 35.4 million tonnes in the 1927-1928 years to 128 million tonnes in 1937. Hydro-electric dams, canals, railways and other infrastructural projects took place, aiming to modernise Russia. This also helped Russia catch up with countries like Britain, USA and and Germany. As Stalin had warned in February 1931 "We are 50-100 years behind the advanced countries. We must make good this lag in ten years. If we don't do it, they'll crush us!". Other than act as propaganda for the Communists by suggesting they could be crushed by foreigners it shows that Stalin's polices were a success in industry terms. Russian life had drastically changed from living in......

Words: 714 - Pages: 3

Different Economic Integration and How Each Affect International Trade.

...Discuss the different economic integration and how each form affects international trade? Introduction Definition of economic integration: International trade is the exchange of capital, goods, and services across international borders or territories. In most countries, such trade represents a significant share of gross domestic product (GDP). While international trade has been present throughout much of history (see Silk Road, Amber Road), it’s economic, social, and political importance has been on the rise in recent centuries. It is the presupposition of international trade that a sufficient level of geopolitical peace and stability are prevailing in order to allow for the peaceful exchange of trade and commerce to take place between nations. Economic integration is the unification of economic policies between different states through the partial or full abolition of tariff and non-tariff restrictions on trade taking place among them prior to their integration. This is meant in turn to lead to lower prices for distributors and consumers with the goal of increasing the combined economic productivity of the states. Economic integration refers to the coordination of national economic policies as a means of boosting international trade, market activity and general cooperation among economies. Formal international economic unions are a recent phenomenon, but former International Monetary Fund economic counselor Michael Mussa traces the roots of global economic integration......

Words: 2503 - Pages: 11

Economic Policy

...Economic policy is the government attempting to stabilize the economy for the good of all people. Ways in which the government attempts to reach their goals is by being in charge of setting the right levels of taxation, government budgets, money supply and interest rates in the economy. All of these actions that the government takes influence the economy in some way. “Some types of economic policy actions can include setting interest rates through a federal reserve, regulating the level of government expenditures, creating private property rights and setting tax rates” (economic policy). Economic policy has many goals. Economic growth is one goal. If incomes of consumers and businesses are increasing over time then economic policy is working well for the economy and its people. Full employment is another goal. This goal for economic policy is to ensure that every member of the labor force who wants to work will find work. The last goal to mention is price stability. The goal of price stability is to stop both deflation and inflation from occurring. If inflation is set too high then prices of goods in the economy will be too high and not sold as much because consumers will not be able to afford them. “In an effort to eliminate uncertainty, the Fed has set a target rate of a steady 2% inflation rate” (McMahon). The Federal Government has an involved role in maintaining America's economy; they need to find the right balance working with numbers and economic expertise. When...

Words: 2113 - Pages: 9

How the Media Affects Policy Making Through Their Reporting

...How the Media Affects Policy Making Through Their Reporting October 30, 2011 How the Media Affects Policy Making Through Their Reporting The debate over how fairly and unbiased the media presents their reporting on issues to the public is an ongoing one. There are those who say the form of the media in which it is presented may have a lot to do with its influence on public opinion. Although, there are others who believe all forms of media hold the same amount of influence. Over the past week, media in the form of newspaper and television has been compared to each other in its reporting on various public policies. The New York Times and ABC’s World News Tonight with Diane Sawyer were looked at comparatively in their handling of stories regarding public policies for the time period specified. The key notes compared are: equal focus on policies within the media form; presence of objectivity or bias within the content; and how in depth the storyline was reported. The lack or overabundance of any of these key notes could have a significant impact on the public view of the same subject. Equal Focus on Public Policy The amount of press given to stories of public policies from The New York Times was much more significant in frequency as compared to the stories focused on by Diane Sawyer from ABC’s World News Tonight. In the past week, The New York Times discussed varied stories ranging from the potential impact the United States’ reaction to the United Nations......

Words: 940 - Pages: 4

How Economic Growths Affect Population Trends?

...Economic growth is likely to affect population trends in a numbers of ways. Some population related variables that can be affected including: • Birth rate • Life expectancy • And population increase/decrease. The assumption in this paper is that when there is increased economic growth, the capita shall be used in various sectors of the economy. Here probably we are talking of a capitalistic economy where the distribution of resources is determined by the market forces of demand and supply. By economic growth in this case I am referring to an increase in the GDP per capita. We also assume that there is fairly equal distribution of wealth in the economy. The assumption also is that the country or world is in a state of stability. I will look at how economic growth is likely to affect each of the variables related to population and how ultimately that affects the total population growth. Firstly economic growth is likely to affect the birth rate. If people have enough money they would have good food. Having good food ensures that the children who are borne are healthy. They have a high chance for survival. People with money can have prenatal medical check ups. That ensures that babies are born with minimum complications. That also reduces deaths of the mothers during giving birth or from related complications. Economic growth is likely to reduce birth rate. Looking at the current situation world over, countries with higher economic growth are having a lower birth rate......

Words: 612 - Pages: 3

How Does Inflation Affect Economic Growth

...  HOW DO IN W OES NFLAT TION AFFE ECT ECO ONOM GROW MIC G WTH? EC CON30 01 ASSO OC.PRO OF.DR Ayla OĞUŞ O Gör rkem To opuz 07 7020111 13       A Abstract t; T This pape examine relation er es nship betw ween infla ation ,defl lator and current GDP o econom growth with usi econometric tec on mic h ing chniques w that provide with p approp priate proc cedures fo estimati and in or ion nference.Fo many c or country, in nflation has an importan effect in econom situatio n nt n mic on.Moreov ver,inflatio is used for to on d see how much countries developed. w d .But in my case i us inflatio for how much y sed on w it effec cted econo omic grow wth.And a also i follo up oth variabl with in ow her les nflation to show how the effect economic g w ey growth. T mode include a poten The el es ntial impa of inf act flation on growth ,current , GDP, inflation effect on consume prices via anuua % valu and in er al ues nflation on deflator(an nnual %). effect o GDP d T mode highlig The el ghts if inf flation inc creses dir rectly ther is a negative re n impact on grow t wth.When inflation above th percent he tage of … …then gro owth is affect in a nega ative way.Below tha rate inf at flation does not hav any ef ve ffect on h y ve tly e growth or it may even hav a slight positive effect. S So,in this paper inc clude both negative and posi h e itive affec of inflation on ct econom grow but mostly neg mic wth m gative aff fect, and also incl lude time series e eviden about how......

Words: 3473 - Pages: 14

How the Affects of Economics, Crime, and Prevention Is Affecting America.

...Running Head: Crime in America Economics, Crime, and Prevention in America Clara m. Jones Strayer University Instructor: Dr. Astiage Tondari Economics 405: Economics of Social Issues June 7, 2012 Abstract Economic theories of crime have long been put forward in an attempt to explain criminality. They undertake to explain crime in terms of economic reasons as we as in terms of the structuring of society. Two of the most prolific of these theories look at the country of America and present differing explanations of the causes of crime in this country (Merton 1938; 1949; 1957; 1968; 1995; 1997; 1999; Clubb, 2001). Robert Merton seeks to explain crime in terms of a strain to anomie’ while Elliott Currie’ sees crime as a product of the factors associated with market society. These theories may concentrate specifically on America they are of general application; therefore, one can consider whether or not they explain the causes of criminality in the UK in the present day. There will be more in this paper on Merton and Currie as well as others in this. This paper discusses the effects of child maltreatment, adolescent maltreatment on delinquency and crime, including violet and nonviolent offending. This paper will discuss, gender difference, deviant behavior, and substance abuse (drugs). This paper will discuss will economic analysis classification of crime, deterrence, rehabilitation, incarceration, recidivism, parole, probation, court systems, good and services, and......

Words: 5340 - Pages: 22