Analyse Government Policy and Its Implications on Economy and Markets

This report analyzes the impact of government policies on the economy and financial markets. It examines various policies, including those related to currency inflation, interest rates, bailouts, subsidies, tariffs, regulations, and corporation tax. The report explores how government interventions, such as controlling the money supply, setting interest rates, and providing financial assistance, can influence economic stability and market dynamics. It also discusses the effects of subsidies and tariffs on domestic industries, as well as the impact of regulations and corporate taxes on businesses. The report aims to provide a comprehensive overview of the complex relationship between government actions and economic outcomes, supported by academic references.

Analyse government
policy and its
implication on the
economy and financial
marketing

Table of Contents
MAIN BODY...................................................................................................................................3
Evaluation of Government policies and its affects on the economy and the financial market:. .3
Currency Inflation:......................................................................................................................3
Interest rate:.................................................................................................................................3
Bailout- .......................................................................................................................................3
Subsidies and Tariffs-.................................................................................................................4
Regulations and corporation tax..................................................................................................4
REFERENCES ...............................................................................................................................5

MAIN BODY
Evaluation of Government policies and its affects on the economy and the financial market:
Government have a power or strength to make the changes in the economy of the country
at any time whenever they want. Changes in economy refers to the modification in the fiscal and
monetary policy of the country. By increasing or decreasing the bank rates they can control the
demand and supply of the market which have a major impact on the businesses and industries.
All these change are done only for the welfare of the country so that they did not have to face
any kind of major issues like inflation and recession. Government can also intervene in the
operations of the businesses or industries if the organisations try to exploit the interest of
consumer. Government can increase the tariff rates, taxes, import duties amount and also can
create some barriers in doing business activities. By the help of all these activities they can
control the prices in the country (Chin and Gallagher., 2019).
Currency Inflation:
In Every countries governments are the only entities who have a right to create or
produce the respective currency. Due to this reason the government can control the supply of
money in the market. The inflation of currency can be good because it help in boosting up the
economy of the country due to increasing in purchasing power and also increasing in the
production of goods in the market. In long run the value of the currency will decrease as compare
to the past value. This situation can be good only for the debtors because they have pay less
value of money to pay off their debts. Huge amount of capital and assets of country can be
destroyed due this situation.
Interest rate:
The next way by the help of which government can control the situation of inflation in
the market. In the situation of inflation Central banks of all countries increases the bank rate,
CRR and SLR. As a result the local banks have to pay high amount of interest and funds to the
central banks due to which the local banks have less money in their funds. Due to this there is
less money in the market and the inflation situation can be neutralised.
Bailout-
It is considered as an activity of providing financial support to the country who economy
is falling and by the help this support the country can save themselves from the collapse. Post

financial crises US government has provided assistance to the industries whom are going through
the bad phase. The bank bailout in 2008 was similar to the loan and saving crises in 1981
(Aboelmaged and Hashem., 2019).
Subsidies and Tariffs-
Subsidies and tariffs both are beneficial for the domestic organisation of the country.
Subsidies refers to providing of monetary support by the governments to the industries so that
they can increase their production capabilities and profitability in the market. The another way of
promoting the domestic industries in the country is increasing the tariffs for the foreign countries
so that the products of their prices get increase and the consumer will shift toward the domestic
product (Reboredo and Ugolini., 2020).
Regulations and corporation tax
The business era often criticize about bailouts to several business enterprise, possibly
because of the understanding their enterprise may require help one day. When it come to rules
and regulations wall street does activities. While subsidies and tariffs can provide enterprise a
competitive benefits, regulations and taxes. Due to increase in the regulation, many small firm
get squeezed which is beneficial for the large companies.

REFERENCES
Books and Journals
Aboelmaged, M. and Hashem, G., 2019. Absorptive capacity and green innovation adoption in
SMEs: The mediating effects of sustainable organisational capabilities. Journal of
cleaner production, 220, pp.853-863.
Chin, G.T. and Gallagher, K.P., 2019. Coordinated credit spaces: The globalization of Chinese
development finance. Development and change, 50(1), pp.245-274.
Reboredo, J.C. and Ugolini, A., 2020. Price connectedness between green bond and financial
markets. Economic Modelling, 88, pp.25-38.