Analysis of Monetary and Fiscal Policies in Business Environment

This report provides a comprehensive overview of the business environment, examining the influence of various internal and external factors on business performance. It delves into the impact of government policies, specifically monetary and fiscal policies, on organizations, explaining how interest rates, taxation, and public expenditure affect economic growth, investment, and employment. The report also explores the significance of global factors such as globalization, technological developments, and international trade agreements, as well as regional aspects like skilled labor and cultural influences. It highlights the role of international organizations like the IMF and discusses the effects of foreign exchange and capital movements. The conclusion summarizes the key findings, emphasizing the interconnectedness of these factors in shaping the business landscape.

Introduction To Business
Environment

TABLE OF CONTENTS
 INTRODUCTION
 MAIN BODY
 Monetary Policy and Their Impact On Business
 Fiscal Policy and Their Impact On Business
 Global Factors and Their Impact On Business
 Region Factors And Their Impact On Business
 CONCLUSION
 REFERENCES

INTRODUCTION
 Business environment is a study of all internal and external factors which can affect or
influence the business.
 This presentation explains, how the different policies of government can affect the
performance of a business.
 This presentation explains about monetary policy of a nation which can affect the
business of an organization by controlling the interest rates of short term loans and
money flow in the market.
 The effect of Fiscal policy on the business of an organization is explained. This report
also gives a brief about the global and regional factor and their impact on the business
activities of an organization.

Government main policy objectives
 In managing the national economy governments attempt to achieve three Major
objectives
 1. Maintaining employment
 2. Control of Inflation
 3. Economic growth

Effects on economic growth
Increase in GDP leads to full employment and the risk of skill shortages
It can lead to excessive demand relative to supply.
Businesses respond to regulate demand by increasing prices leading to inflation

Effects of full employment
It leads to increase in GDP resulting in economic growth
It can lead to rise in wages as a result of the bargaining power of employees
Businesses respond by increasing prices to cope with rise in wages leading to inflation

Effects of control of inflation
Control prices deter investment
It leads to low economic growth
It reduces employment opportunities

Monetary Policy and Their Impact On Business
 Monetary Policy is a policy which is prepared and implement by central bank with the
consultation of central government.
 Purpose behind this policy is to control monetary movement in the economy which is
arisen due to some situations like Inflation, consumption, growth and liquidity.
There are two types of monetary policy -
 EXPANSIONARY MONETARY POLICY
 CONTRACTION MONETARY POLICY

Impact of Monetary Policy on the Business Activities of
organization within UK
 UK government and central bank uses monetary policy for the purpose of control the
level of inflation by using interest rates.
 Central bank do change in its interest rate which impact the rate of commercial bank.

CONTINUE…..
Impact of Monetary Policy On Investment
 When central bank increases its rates, this lead commercial banks to increase its bank
rates.
 This will make borrowing costlier and promote saving.
 This will lead to low investments.
 On the flip side, when central bank decreases its rates, this lead commercial banks to
decrease its bank rates. This will make borrowing cheaper and de-promote saving. This
will lead to more investments.

CONTINUE…..
Advantages of Monetary Policy -
 Encourage higher levels of economic activity
 Promotes transparency

CONTINUE…..
Disadvantages of Monetary Policy -
 Not guarantee economy recovery
 Take time to implement