Direct intervention of government in economy, Managerial Economics

Direct intervention 

The government can also intervene directly in the economy to see that its wishes are carried out.  This can be achieved thorough:

a.     Price and incomes policy

This is where the government takes measures to restrict the increase in wages (incomes)  and prices thus can be statutory or voluntary.

b.     Supply-side policies

These are policies to influence the economy by the productivity of the free market economy.  For instance unemployment can be controlled through supply side measures such as skills training, reducing social security payments, lessening the disincentives presented by taxation, facilitating the easier flow of finance to firms, removing firms, removing restrictive practices etc.

c.     Regional policies

These are policies designed to help the less prosperous regions.

Posted Date: 11/30/2012 4:31:19 AM | Location : United States

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