The government’s economic policy will affect your business directly via taxes and interest rates, and indirectly via public spending. Tax laws can increase or decrease the amount of tax you have to pay, and therefore will change your net profit. Special rules or exemptions may affect certain business sectors.
What are the main policies of government towards business?
The Government’s responsibilities towards business are as follows:
- Enacting and Enforcing Laws.
- Maintaining Law and Order.
- Providing Monetary System.
- Balanced Regional Development and Growth.
- Provision of Basic Infrastructure.
- Supply of Information.
- Assistance to Small-scale Industries.
- Transfer of Technology.
Why is consumer confidence important for the economy?
Consumer confidence surveys are key indicators into the overall health of the economy. When people feel confident about the stability of their incomes it influences their spending and saving activities.
How does consumer confidence in the economy affect a business?
A fall in consumer confidence can lead to a rise in savings. When confidence returns, consumers may spend these savings on items they have delayed buying. Delayed investment. Similarly, a decline in confidence may cause firms to hold back on investment.
What can increase consumer confidence?
Personal debt levels. Rising debt levels will be a source of concern – especially if interest rates rise or the economy slows down. Economic growth – A recession will invariably be associated with a fall in consumer confidence; positive economic growth tends to improve consumer confidence. Current economic situation.
What happens to consumer confidence in a recession?
During an economic expansion, consumer confidence is usually high. If for some reason consumer confidence declines, consumers become less certain about their financial prospects, and they begin to spend less money; this in turn affects businesses as they begin to experience a decrease in sales.
