effect of government interventions

 effect of government interventions

The government intervenes in the economy intending to benefit its country. Free market economies state that government interventions cause an unfair allocation of resources. As a result, government interventions should strictly remain as government interventions. Other people believe that government interventions are powerful in fields such as monopoly and public goods. It is important to note that government interventions can affect economies differently. For one, it promotes equal and fair distribution of resources. The government must intervene in different businesses to ensure that the consumers benefit. The consumers are part of the economy hence the stabilization of the economy.

The other effect of government interventions is on market failure. Organizations work by prediction. They try to understand and establish the approximate number of people that will require a certain amount of goods. If their prediction is wrong, then the government can help stabilize the economy. The government also intervenes in the macroeconomic environment to reduce recessions and over unemployment.

A recession is described as the decrease or fluctuation of something. In this case, the recession of the economy is the decrease in economic activities. The government intervenes in such a situation by ensuring there is enough production of goods. The government also provides that the market prices and the allocation of resources are equal. This ensures equality and allows everyone to survive in the declining economy. It is essential to note that a recession can lead to social problems such as unemployment and poverty. The government works to ensure the effective functioning of the economy, thus reducing the associated risks. The government also provides employment opportunities for the better part of the population during the economic recession. This is an example of the distribution of resources in each individual gets a fair share.

Response

I agree with your posts that governmental interventions are aimed towards affecting the economy positively. However, I would also like to add that some interventions can lead to massive losses and encourage the unequal distribution of resources. An important factor I noticed in your essay is the description of the word recession. Recession is a decline or decrease in the economic activity of an organization. It is important to note that during the recession, the private sector is affected negatively as there is an increased decrease in investments and spending. This leads to slow economic growth in a country. If the government does not initiate the necessary rules and laws to guide the country during this period, the country is at a significant risk of increased poverty levels. This requires the government to collect funds to be channeled in the economy. If the country falls into a deep recession where they need the allocation of funds quickly and easily, then they are allowed to lend from the private sector. In essence, both the public and the private sector play a significant role in the case of recession. In conclusion, I agree with your post concerning government interventions. It helps ensure the equal distribution of resources.

Response Two

I agree with your post that government interventions can be beneficial for the economy. I would, however, like to add on some new factors regarding economic recessions. The government intervenes in this sector by influencing supply-side policies. All this is to achieve objectives such as a decrease in the unemployment rate of people in the country and attain high sustainable economic development. Other goals include influencing the environmental sector. It is important to note that supply-side policies are aimed towards increasing the productivity of the country. If these policies are successful, the LRAS shift to the right. This affects the economy positively in the long run. Governmental interventions during recessions also help alleviate the danger of inflation. The second set of policies employed by the government is the demand-side policies. The government intervenes using this policy in an aim to reduce the cases of inflation and influence economic growth. While these policies may be tailored to achieve the same thing, their influence on the economy is different. It is important to note that through these policies, the government helps secure employment opportunities for people. In essence, these governmental interventions affect organizations and, in turn, affect people.