The Effects of Central Government and Other Economic Factors on Business

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THE EFFECTS OF CENTRAL GOVERNMENT AND OTHER ECONOMIC FACTORS ON BUSINESS

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UNIVERSITY ()

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The effects of central government and other economic factors on business.

Business and in general the economy is impacted by various factors that are in play and those that regulate the economy for example the central government which plays a vital role. There are so many ways in which the government regulates the economy in a country by setting up of policies and regulations that govern how things are and should be, but majorly the central government regulates the monetary and fiscal policies. When we talk about the monetary policies I will look at some of the ways in which money spending and lending is controlled through interest rates and setting limits of borrowing money by commercial banks in some cases (Boyes et al., 2008). Fiscal policies are those policies that the government puts in place to regulate its spending and the various rates of taxation (Fernando, 2011). I also look at some of the other factors that affect the business environment such as the current level of inflation and its effects, rates of employment and unemployment, legal charges and laws, and balance of payments in the economy. All these impact the business environment in one way or the other and thus they require to be monitored so that appropriate measures and adjustments can be taken.

Part 1- The nature and purpose of the central government in managing the economy.

The central government plays the role of overseeing and ensuring that there is a good business environment and one that favors the growth of the economy and a rise in the real GDP. The central government does this by setting of regulations and economic policies that stipulate how for example companies and organization are supposed to operate.

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The central government regulates the economy by delegating some of the duties to its other agencies such as the central bank of the country that controls money and the banking sector. It is the work of the government through the president and the congress to make fiscal policies and trade regulations. By doing this the government also ensures that its citizens are protected from harmful products and unethical business practices (Gaspar, 2006). By managing the economy the central government ensures a favorable and growing economy that is relatively stable. The fiscal policies such as taxation are used to