Business Environment Essay Example | Topics and Well Written Essays - 1750 words - 1

Business Environment - Essay Example The country’s decision regarding the resource allocation represents the economic systems that it practices. Normal economic systems range from market economy to command economy. In a planned or command economy, all the decisions are performed by the government. The role played by the government in such economy is related to the economic decisions, which it formulates by taking advices of the top hierarchical bodies. After the decisions have been finalised, they are enforced upon the bodies presented below the hierarchical level. The production process of any country is usually planned, coordinated and organised by the government. A planned economy involves an intensive deal of strategic planning. It has been further observed that governmental planning of allocation of resources is generally organised in such a manner which facilitates to satisfy the requirements of all the citizens dwelling within a country. The greatest advantage of resource allocation under the vigilance of government is equal distribution of wealth (Palacios & Harischandr, 2008). Free market economy refers to the economic system, wherein decisions are farmed by considering the market mechanism. Demand and supply results frame the vital element of the decisions pertaining to resources allocation. Within the free economy, the government does not interfere in any decision-making process. The advantage of resource allocation in free economy is that the goods are sent to that particular area, where it is in demand. Furthermore, in such economy there exists no requirement for any overriding body to interfere in the decision process (Palacios & Harischandr, 2008). Mixed economy incorporates the characteristics of both the economies discussed above. In such economy, a few of the goods and services are produced by the free-market sector, whereas the other products and services are produced by the government. The balance that exists between the government’s provision and the market econo my provision is equal. Government plays a vital role in the development of mixed economy. Initiatives taken by the government to perk up the industrial development can facilitate to ensure benefit for the dwellers in the economy at large. Moreover, the other crucial benefits of a mixed economy entail the facet of lesser inequality related to the earned income, balanced growth of regions and freedom of possessing private property among others (Palacios & Harischandr, 2008). 2. Assess The Impact Of Higher Taxes On Employees (An Instrument Of Fiscal Policy) And Higher Interest Rate (An Instrument Of Monetary Policy) On The Costs Of Borrowing Of A Business Rise in the taxation rate lays a greater impact on the employees. When tax is charged on a product, it usually increases the rate of it. This excess rate of the product that includes the economic cost is the ‘excess burden’ of the tax. It has been further ascertained that higher rate of taxation usually decreases the grow th along with investment pattern of an individual. Taxes usually disrupt the individuals’