An Economics Report: Role of Government in the Economy of Jordan

This report provides an overview of the role of government in the economy, focusing on monetary and fiscal policies. It discusses how governments use these policies, including setting interest rates, taxation, and government spending, to manage inflation, recession, and market dynamics. The report examines how government influences markets through taxation, subsidies, and price controls. It also highlights the role of the Jordanian government in economic development, including its support for education and small and medium-sized enterprises, and the implementation of financial management systems. The conclusion emphasizes the significance of economic growth and its impact on a nation's citizens. The report includes references to relevant literature on the subject.

Introduction To Economics

Table of Contents
PROJECT ........................................................................................................................................3
CONCLUSION................................................................................................................................4
REFERENCES................................................................................................................................5

PROJECT
The Role Of Government In the Economy
In every economy, government takes some actions in order to develop the economic
conditions of the countries. Government plays an important role in monetary and fiscal policy of
the country. Through monetary policy, government handle the demand and supply of money and
interest rates level for the development of country. Through fiscal policy, government regulate
the tax policy of the country (König and Schuknecht, 2018). Role of government are explained
by these two policies -
MONETARY POLICY
It is implemented by the central bank which comes under the government of the country.
In order to solve the problems of inflation and recession in the economy, central bank with the
help of government takes actions such as increase or decrease in interest rates for the control of
supply of money in market.
FISCAL POLICY
It is implemented by the tax authorities of the government. In this policy, government
uses taxation and government spending as the tools to control the supply of money in the
economy (Josua, 2016). When there is recession in the country which means there is no flow of
money in economy, to increase the supply of money, government increase the spending and
reduce the tax rate. In the contrast, when there is inflation, to reduce the increasing pricing,
government will increase the tax rate and decrease its spending.
Thus, government plays a major role in economy through monetary and fiscal policy in
case of inflation and recession in the economy.
Government Influences Market
Government affects the market by following 3 major tools such as -
IMPOSE TAX
Government impose purchase tax on the imported products and services in order to
reduce the import and increase in exports of the products. This lead to increase in cost of
products and services. This cause in supply of products and services in the market.
PROVIDE SUBSIDIES
Government provide subsidiaries on the particular products in order to reduce the
production costs. Thus, lower price of the products leads to high supply in the market.

Government generally provide subsidiaries on those products which is necessary for the living of
citizens.
SET THE PRICE FOR PARTICULAR GOODS
Government fixed the minimum and maximum price of some particular goods which
affects the demand and supply of those goods in the market (Patai, 2015). The purpose behind
this fixation are as follows – provide basic goods at reasonable price and reduce the competition
for the local company in the market.
ROLE OF JORDAN GOVERNMENT ON ECONOMY
I have been aware of the role of Jordan Government in the economy. The government of
Jordan plays an important role in economic development as a development planner and as a
financier. Government promoted the education of the population which lead to economic
development of the citizens and country. Government also focus on the micro, small and medium
size enterprises and provide them financial and market assistance in order to develop the
economy. Government adopts the Governmental Financial Management Information System
which improve the financial and accounting network of the country.
CONCLUSION
From the above study, it has been summarised that government plays a crucial role in the
economic growth. Economic growth is an important because it describes the conditions of
population of nation and contribution of the nation towards its citizens.

REFERENCES
Josua, M., 2016. Jordan at a Glance: History, Politics, Economy.
Patai, R., 2015. Kingdom of Jordan. (Vol. 2241). Princeton University Press.
König, N. and Schuknecht, L., 2018. The Role of Government and Trust in the Market Economy.