A government might enact expansionary spending.

How can a government affect your business?

One way is by enacting economic policies. In this post, we will discuss 7 different types of economic policies that governments might enact to influence businesses and their decisions.

Each policy has its own pros and cons, so it’s important to know what you are getting into before choosing which one is best for your company. Expansionary Spending: the government might enact expansionary spending to stimulate economic growth. This means that they are increasing public sector investment in order to boost demand and production.

The pros of this policy include increased employment, higher incomes for workers, and more money flowing through the economy which can lead to an increase in tax revenue (pros all around!).

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However, there is also a downside as well if inflation gets out of control then it could be hard on those with fixed incomes like pensioners or people receiving welfare benefits. Economists say that we should only use this type of economic policy when unemployment is high at least two consecutive quarters. Fiscal Policy: governments can choose to adopt fiscal policies which affect how much money flows into.

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