Describe The Roles Of Government In The Present Business Environment

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of the government to change its
levels of income and expenditure, through the annual budget. By budgeting for a
deficit or surplus, the government will contract or expand the economy. e.g If
the government needed to cut unemployment they would budget for a deficit so
more money is injected and less money is taken from the economy by less taxes
and higher expenditure raising employment.
Monetary policy can also raise the level of economic activity. It
controls the availability of money by influencing the level of interest rates.
Lowering interest rates encourages people to spend and borrow while higher
interest rates encourages people to save and not borrow. By lowering interest
rates the government encourages spending thus increasing the level of economic
activity.
Income policies influence wage outcomes by negotiating with the unions
and the employers and putting arguments before the industrial relations
commission. Governments can restrain real wages and cause unemployment ...

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