Business Management and Macro Economic Policy: A Detailed Analysis

This report provides a comprehensive analysis of Business Management and Macro Economic Policy. It begins with an introduction defining general economic concerns, including government economic policies, labour markets, income distribution, and employment. It then explores monetary and fiscal policies, and capital markets. The main body delves into general economic concerns, examining government policies' impact on the business environment, the dynamics of labour markets, income distribution's effects, and the implications of employment and unemployment. The report further investigates monetary policy, including supply and demand forces of money, and the implications of transaction, precautionary, and speculative motives. Fiscal policy, taxation, social security, public expenditure, and debt sustainability are also examined. The report provides an in-depth understanding of capital markets, including primary and secondary markets, crowdfunding, and cryptocurrencies. The report concludes with a summary of the key findings and concepts discussed throughout the analysis.

BUSINESS MANAGEMENT
AND MACRO ECONOMIC
POLICY

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
General economic concern..........................................................................................................3
Monetary Policy...........................................................................................................................5
Fiscal policy.................................................................................................................................7
Taxation and its macro-economic effects....................................................................................7
Social security, contribution, pensions and benefits....................................................................7
Public expenditure deficit............................................................................................................8
Sustainability of public debt........................................................................................................8
Capital markets............................................................................................................................8
Primary markets...........................................................................................................................9
Secondary market........................................................................................................................9
Crowdfunding..............................................................................................................................9
Cryptocurrencies........................................................................................................................10
CONCLUSION..............................................................................................................................10
REFERENCES................................................................................................................................1

INTRODUCTION
Government economic policies are the measures with the help of which the government of a
country try to influence and make decisions regarding the direction of the economy of the
respective country. The government also look out the labour market, the market refers to the
supply and demand of the employees in which business provide demand of labour and people
provide supply of labours. The distribution of income is a way with the help of which
government measure how many people earn different amount of income. Monetary policy is a
tool which is used by central banks of countries to influence demand and supply of money in an
economy. Fiscal policy is a tool in which government collect the revenue from public via taxes
and further uses it for country development. Capital market is a market in which long-term debts
and equity-backed securities are bought and sold (Huynh and Nguyen, 2020).
MAIN BODY
General economic concern
Introduction
The general economic concern is a challenge which is faces by the countries while they try
to improve their economic position in order to gain opportunities. Economics is a concerned with
the production, distribution and consumption of product and services. Basically, it covers the
decision and choices of the individual, businesses and government regarding the allocation of
resources. The government faces the challenges and concern related to poverty, unemployment,
environment security, inflation, health crises etc (Oxford Analytica, 2021).
Government policies and its impact on business environment
Government of the countries generally established various rule, regulations and policies
that provide guidance to the businesses. This is not only existing in national level but the states
also set their own rules to influence businesses. The stable political culture provides variety of
opportunities to the business to expand their company all over the world. Any increase in the
taxes reduces the investment and the impact of which the spending pattern of the consumers also
gets decreases. The reduction in the private investment result into the shrink’s production of
products and services. The interest rate of the borrowings set by the government directly
influence the business financial conditions. It is because if the interest rate increases the spending
pattern of the customers decreases and the impact of which the companies will got get money for

their daily business operations and also for further expansion (Abdulsahib, Eneizan and
Alabboodi, 2019).
Labour market and their impact of business environment
The labour market is existing at the place where businesses hire the workers for the
functioning of their day-to-day operations. Basically, the amount of labour needed in a business
depends upon the nature of business such as capital extensive or labour extensive. The business
that depends on manual work more rather than technology than it is know as labour extensive
and vice versa for capital extensive. Any shortage in the labour market badly affects the business
to the large extent such as recruitment of new and talented people which helps their business to
grow faster as soon as possible. Shortage of labour increases the demand of the employees and
the impact of which the companies need to increase their wages in order to retain them. And if
not than their competitors try to influence the workers and try harder to poach the best staffs (Le
Borgne and et.al., 2021).
Income distribution and their impact on the business environment
The effect of income distribution has both positive and negative consequences over the
businesses because any changes in the spending pattern of the consumers affects their demand
and supply of products and services. An increase in income leads to increases in demand of
goods further leads to supply of goods by business and vice versa. But it is not same for all the
businesses because the companies that manufacture and produces necessary and daily use
products such as rice, wheat, milk, fresh vegetables and fruits etc. In this case, the demand of
their product even doesn’t get affected because of low spending and buying pattern of individual.
Along with that the spending of income of consumers increases on low prices as compared to
high-price items called substitute products which further leads to loss of profit to the business
deals in high-quality products at high price (Thyroff and Kilbourne, 2017).
Employment and their impact on business environment
The impact of unemployment over the business is that it provides them challenge related
to increase in the federal and state taxes. While on the other hand, unemployment also reduces
the admirative cost of the businesses because of the non-availability of jobs workers get ready to

work even at low wages. The effects of underemployment over the business are same as
unemployment because both causes poverty and the impact of which people don’t buy much
which lead to decrease in consumer demand and slowing business growth. The employment
increases the business ability to earn more profit because of the high finances and daily lifestyle
of the individual. Though, it also leads to increase in wages of employees because of
employment but the businesses with the help of talented employees increase their productivity
and performance (Aziz and et.al., 2020).
Monetary Policy
Introduction
The central banks and institution of countries take various actions and also communicate
measures to manage and improve the money supply in the country. Credit, cash, cheques, money
market mutual funds all are included in the money supply and the government issues various
policies related to this to increase liquidity and also to create economic growth. Along with
increasing liquidity the government also launches policy to reduce liquidity with the help of
which inflation is not arises. In order to increase the money supply, the central banks of the
country manage the interest rate, reserves requirement and the number of government bonds
(Boucekkine, Laksaci and Touati-Tliba, 2021).
Supply and demand forces of money
The factors that force the supply of money in the modern financial system are as follow:
 Open market operations: In this the central banks purchase government bonds in order to
create money effectively as same as quantitative easing.
 The reserve requirement imposed by banks: This is an amount of money that is deposit
by the customers on banks and bank retain it rather than investing it to some other place.
 The policy of interest rate setting by central banks: The rate of interest set by the central
banks influence the borrowing amount of the consumers for the purpose of households
and businesses.
The factors which force the demand of money in the financial market are as follows:
 The demand of money rises because of low interest rate of loans and demand of money
decreases because of high interest rate of loan.

 The number of monetary transactions as per the actual expectations.
 The increases in GDP growth rate increases the demand if money and decreases because
of the lower GDP growth as compared to other countries.
 The extent of the pace of financial innovation which means extent to which it is possible
by the consumer to use debit and credit cards.
 The rate of anticipated inflation rate is also one of the factors which influence the demand
of money in the market.
 The extent to which the public wants to hold other financial institutions such as bonds,
property and also saving option (Alenoghena, 2019).
Implication of different aspects of the demand for money
There are basically three aspects of the demand of money which include transaction,
precautionary and speculative
 Transaction motive of holding money: This is an aspect of money which arises from the
exchange of money for making the regular payments of goods and services. The
implication of this aspects and needs of money is both for personal and businesses
exchanges. The transaction demand of the money act positively when the real income and
expenditure is known to person and business. And on the other hand, it acts negatively
because of the different interest rate on various assets and also because of opportunity
cost. It is also depending upon the time of expenditure and the length of period of
payments.
 Precautionary motive of holding money: This is an aspect of holding of money by the
businesses and public with the help of which they can deal with contingencies and
unexpected events that might require cash. This need arises because the public and
business worry about their future which uncertain in nature. But nowadays they are less
depending upon the precautions because assets are easily converted into cash.
 Speculative motive of holding money: In this, the people and businesses depends more
on the bonds and property rather than cash. Here, the businesses see the money as a class
of assets from which they can receive higher returns and reduces the opportunity cost of
holding the money with themselves. It is because holding the money provide them zero
rate of return and even inventing it in banks will provide minimum rate which rate is

lower than the general inflation rate. This is driven by the future expectation of inflation,
interest rate and market returns (Nelson, 2020).
Fiscal policy
Fiscal policy is the use of government spending and tax policy to impact economic conditions
such as aggregate demand for goods and services, employment, inflation, and economic growth.
It also refers to the use of taxation, government spending, and public debt management to
achieve specific goals. This pertains to the government's revenue and expenditure management,
as well as public debts, deficit finance, and tax structure (Chugunov and Pasichnyi, 2018).
Taxation and its macro-economic effects
The tax is collected at three levels: the central level, the state level, and the local level. Tax is a
mandatory contribution made by a citizen or organisation to the government that is used to cover
the costs of welfare activities (Gaspar, and et.al., 2019).
Tax allocation between the Centre and the States is done ahead of time, and taxes are collected
accordingly.
The tax system is split into two parts:
a) Taxes levied by the central government, such as customs duties, income taxes, and corporate
taxes.
b) Taxes levied by the state: direct and indirect taxes.
Taxes are collected for public benefit and on imports from other countries. The macroeconomics
involved is the political ties between countries and, as a result, the customs tax imposed, which
may be high or low depending on the countries' connections.
Social security, contribution, pensions and benefits
They are payments made to the government in exchange for future benefits. Unemployment
insurance benefits and supplements, accident insurance, disability and old age pensions, family

allowances, medical bill reimbursements, and medical service provision are among them. The
funds will be used to fund social benefits and will be distributed to government agencies that
deliver them. As a result, it can be described as an investment made for future returns that is
related to the government and measured in percentages of GDP and taxation (Chugunov and
Pasichnyi, 2018).
Public expenditure deficit
The term "public expenditure" refers to government expenditures on social welfare programmes.
A budget deficit occurs when government spending exceeds revenue earned from the public and
private sectors, resulting in a lack of funding for public programmes during that time period. In
government rule, when public savings are positive, the budget is said to be in surplus, and when
they are negative, the budget is said to be in deficit (Gaspar and et.al., 2019). It can also be
linked to spending market trends, such as when uncertainty leads to less spending and more
saving, and when the economy is booming, more spending and less saving.
Sustainability of public debt
The debt of a country is said to be sustainable if it can meet its present and future obligations in
terms of the country's and public welfare. Debt must be used judiciously for development and
project activities in order for a country's borrowings for public welfare schemes to be in
accordance with financial leverage, as it is in the case of organisations where debt must be used
judiciously for development and project activities but a balance must be maintained so that debt
does not become too high and cause the company to become insolvent (Slepov and et.al., 2017).
The interest rate burden is also associated with debt, so the government must be cautious when
entering into loan agreements with other countries on clear terms, and aim to obtain loans with a
lower rate of interest that can be paid back and debt that can be completely utilised within the
time frame. The goal of debt financing should be to serve the public, not to prove contrary and to
slow down the economy for short-term gain.
Capital markets
The capital market is a type of secondary market in which investors typically trade long-term
investments and borrow money. A capital market is a marketplace where buyers and sellers trade

financial securities such as bonds, stocks, and other derivatives. Long-term savings are mobilised
to fund long-term investments. The capital market provides risk capital to investors in the form
of equity or quasi-equity. They improve operational efficiency by reducing settlement times and
simplifying transaction procedures. In addition, transaction costs are reduced (Fama, 2021).
Primary markets
Primary markets are new issue markets where new capital can be raised in the form of shares and
debentures. The capital market is involved with the sale and purchase of shares and debentures of
private firms, primary sureties of government organisations or new sureties, and public sector
bond issues. This is also the market where a firm sells shares of common stock to the general
public through an initial public offering, sometimes known as a first public offering. As a result,
IPOs are conducted in the primary market (Slepov and et.al., 2017).
Secondary market
The secondary market is the old issue market for purchasing and selling existing company shares
and debentures. The market for both existing and newly issued securities. It is the market in
which securities are exchanged after they have been offered to the public in the primary market
and listed on a stock exchange (Fama, 2021). The buying and selling that occurs following the
initial public offering, which includes both equity and debt markets, is referred to as the
secondary market. Stock exchanges play a crucial role in the trading of capital market
instruments in secondary market transactions.
Crowdfunding
It is a type of alternative finance that involves gathering modest amounts of money from people
for a specific cause via various online outlets such as websites and social media. However, there
are limitations on who is allowed to fund a new firm and how much money can be provided
(Petruzzelli and et.al., 2019). There are a variety of initiatives from which investors can choose
and invest small amounts of money.

Reward based funding: Individuals donate to a project or business in the hopes of receiving a
reward in the form of a product or service, which is also known as non-financial crowdfunding.
Donation-based funding: This can be defined as a gift to a charity or a foundation that raises cash
for those in need, such as earthquake victims or people with health problems. The donor receives
nothing in return for their donation, but it is made in the name of a social purpose to assist others.
Peer to peer lending: It is a type of social association of customers and investors that acts as an
alternative to banks and lends money to those who need loans at lower interest rates than banks
and other finance organisations. Individuals must create an account and invest money in the
online company, which then presents loan options and connects borrowers with lenders so they
can choose a loan.
Cryptocurrencies
It can be described as a type of virtual currency in which the owner can exchange virtual
currency for goods and services. The currency's owner does not need to keep huge amounts of
cash on hand, and the currency is valued in different countries based on exchange rates. Bitcoin
is an example of a cryptographic mode of operation currency. Bitcoin is a public key function
that generates a pair of cryptographic keys called public and private keys (Hileman and Rauchs,
2017). In the case of Bitcoin, public keys serve as a function to which payments can be
transferred, while private keys serve as payment security and must be supplied when sending or
receiving money from a specific address. Holders agree to share in the transaction value in
crypto currency transactions. This system also has wallets in the form of paper wallets and
electronic wallets. They're also available as apps for mobile devices and PCs, as well as
hardware devices and paper tokens.
CONCLUSION
The file discussed the economic challenges that a country has, as well as the many instruments
and policies that are utilised to govern the economy. It discussed economic issues such as
unemployment, inflation, and how they affect the corporate environment. The labour markets, as
well as the regulations that govern them and how they operate in the corporate environment,

were discussed. The income distribution and the need to narrow the income gap were discussed.
The emphasis was then shifted to monetary policy and its functions. The consequences and key
components of money demand were highlighted, as well as the demand and supply forces of
money. The country's fiscal policy and its macroeconomic consequences were discussed.
Deficits in government spending were discussed, as well as the necessity for debt sustainability.
The importance of capital markets was highlighted, along with the many forms of capital
markets and their functions. Various forms of crowd funding measures were discussed. An
example was used to explain cryptocurrency. All aspects that influence economic decisions were
examined, it might be argued.

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