Economics for Business Assignment - (Doc)

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Added on 2020-02-14

Economics for Business Assignment - (Doc)

Added on 2020-02-14

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Economics for Business

TABLE OF CONTENTSINTROUDCTION...........................................................................................................................1TASK 1............................................................................................................................................1Using supply side policies to facilitate economic growth...........................................................1TASK 2............................................................................................................................................5How government can use fiscal and monetary policy to temporarily slow economies...............5CONCLUSION................................................................................................................................9REFERENCES..............................................................................................................................10

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TABLE OF FIGURESFigure 1: Supply Side Policies used by UK government................................................................5Figure 2: Diagram showing fall in AD to reduce inflation..............................................................9

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INTROUDCTIONA critical part of working of an enterprise is the economic environment. It needs to be asclose to perfect as possible for the firm to operate successfully. Over the years numerous changeshave happened in terms of economic aspect of operating and managing a business, but never theless, its importance has not declined by any manner (Baye and Beil, 2009). The present reportfocuses on explaining ways in which governments use supply side policies to facilitate andpromote economic growth in their countries. Furthermore it also explains why and how fiscaland monetary policies are utilized by governments and other such institutions to controleconomic performance of the country, whether it is slowing down the economy or speeding it up.TASK 1 Using supply side policies to facilitate economic growthThe branch of economics that deals with identifying ways to enhance production capacityof a nation is known as supply side of the economy (Kirchhoff, 2014). They support benefits thatcan be obtained by liberating markets like labor market, flexible and autonomous. But oppositeto it, supply side policies advocate interference from government. It opines, government andother such agencies can provide support in adverse conditions, thus helping market(s) to stabilizeits functioning and operate efficiently and effectively.Any regulation or legislation that helps inenhancing the production capacity can be included in supply side policies. There are varioustypes of actions that government can take to improve supply-side performance.Individual actions that government(s) can take in context of supply side policies can bedivided into two categories – improving productivity of factors and improving performance offirms. There are certain ways to enhance productivity of factors. Herein tax system can be usedto provide incentives to stimulate factor output, instead of changing the demand. This aspect isconsidered a very basic part of supply side policies (Harzing and Wal, 2009). Government andits associated agencies can reduce taxes such as income tax, corporation tax, etc. By loweringincome tax, unemployed people can be encouraged in a way, as this scheme would become anincentive for them. They will try harder to find a job. It would also motivate entrepreneurs toopen more businesses, so that they can enjoy benefits of lower income tax rates. This waynational output can be increased. On the other hand, some supply side policies focus onenhancing competition in the labor market along with abolishing some restrictive practices, as1

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