Government Economic Policies and Business

... Government Economic Policies and Business Question 1 (a) The government used fiscal policy to increase public spending. This implies that a rise in taxation also took place. The rise in taxes meant that people had less money to spend, i.e. less disposable income. As a result, they were unable to buy as much. This caused the demand of certain products to decline. As a result, the respective companies made less profit. This meant that they were unable to produce as much (also to avoid excess supply). This led to companies cutting jobs. The cut in jobs increased unemployment, which meant people had no job, so they had no income, therefore they were unable to spend, which makes the demand fall further, and so on. (b) The government had used fiscal policy to boost the economy. In Japan, the fiscal policy was used to fund the games industry, to create more jobs, in order

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