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Introduction to Economics for Business

   

Added on  2020-01-28

14 Pages4043 Words250 Views
FinancePolitical Science
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ECONOMICS FORBUSINESS
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TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1Use of supply side policies to facilitate economic growth.....................................................1TASK 2............................................................................................................................................4Use of fiscal and monetary policy to encourage economic growth........................................4CONCLUSION................................................................................................................................9REFERENCES..............................................................................................................................10ILLUSTRATION INDEXIllustration 1: Fiscal Policy and Aggregate demand-supply curve..................................................6Illustration 2: Impact of Monetary and fiscal policy on Aggregate demand...................................9
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INTRODUCTIONEconomics for business is the application of the economic theory and quantitativemethods in business for the increment of their productivity and efficiency. It identifies therelationship between different associated factors such as labour, capital and product markets.These methods are adopted for the optimum allocation of resources. On national level,government and other organisation uses different tools to stabilize the economy. Few tools aresupply side policies, fiscal policy and monetary policy (Gertler and Karadi, 2011). Supply-sidepolicies are approach adopted by government to increase productivity in economy using certainways. Monetary policy is the tool adopted by central bank to regulate money supply and fiscalpolicy is the tool to stabilize the economic condition of the country. Present report is prepared toelucidate the three concepts and their utility for a country. TASK 1Use of supply side policies to facilitate economic growthMeaning: Supply side policies are the methods adopted by the government to increase theproductivity of the economy through bringing changes in the factor of production. In this way itis able to improve institutional framework and capacity to produce (Murfin, 2012). Further, withthe adoption of these methods it is able to shift the long run aggregate supply curve to the right.Types: There are two ways in which government is able to increase the productivity of theeconomy firstly through enforcing market forces and enhancing their impacts which is referredas the market based policies and secondly the policies which required the intervention inincrementing the quality and quantity of the factors of production is referred as theInterventionist policy.Objectives of supply side policiesSupply side policies are used by the government to fulfil certain objectives and goals andtargets for the economy.Lowering of inflation: Global market volatility and economic crises brings changes in the pricelevel of the country in the significant manner. While such fluctuations, there are times whenprice level consistently rise which is harmful for the health of the economy. In that condition,government uses this supply side policies to bring down the price level and stabilize theeconomy. It helps in reducing the cost push inflation existing in the country.1
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