Summary
Summary M2 Unit 38
- Institution
- PEARSON (PEARSON)
Distinction achieved in Unit 38
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Neil Patel 40068068 Unit 38 M2M2- Analyse the effects of fiscal and monetary policies for a selected business
in terms of the market it operates in.
There are many effects that both fiscal and monetary policies have over a given
organisation, such as Balfour Beatty. It is of great importance to analyse these
effects to overall ensure that the company is able to perform successfully through
any given economic standing throughout periods such as boom and decline.
Through the use of these policies, a business such as Balfour Beatty can be
impacted due to the fact that they are a business that operate within the economy
and also because they are loyal contractors of the government for their services.
The first policy that I will be mentioning is the fiscal policy. Fiscal policy is the
government policy towards the public spending, taxes and borrowing. The
government spends money in the economy to boost public spending and this will
result in a multiplier effect as there are injections of spending in the economy and
this will increase the flow of money in the economy as there will be more demand
and spending of services for example towards Balfour Beatty. There are many types
of taxes which are implemented by the government. Fiscal Policy is mostly in
association with the increase/decrease of taxes, chosen by the government, to
control the public spending within the economic environment. These decisions that
the government makes will have a vast effect over Balfour Beatty for many reasons.
Firstly, if the government feels as though spending within the economy has been
reduced and not meeting the expectations needed for a balanced economic growth,
the reduction in taxes will mean that there would be less jobs and possible
redundancies for Balfour Beatty due to less money coming from the government as
the taxation is reduced. However, a decrease in taxation could turn out to be good
for Balfour Beatty as they will be getting charged less tax therefore increasing their
overall profit. Despite that, this can also have a very negative effect on Balfour
Beatty because a decrease in tax leads to less money being left for the government
to spend towards them. Balfour Beatty are very reliant towards government fundings
and decreasing taxation would have a negative impact towards Balfour Beatty’s
future plans such as their academy, building schools and other services which are
going to improve the surroundings. Through fiscal policy, regulators attempt to
improve unemployment rates, control inflation, stabilise business cycles and
influence interest rates with an effort to control the economy. The government could
try to lower taxes within the economy to fuel economic growth during times where
the economy could be going through a recession. This is mainly because a reduction
in taxes leads to an increase in the income that an individual has which induces
spending throughout the economy. Balfour Beatty could be heavily affected should
the government decide to take a fiscal stance. This is because it can go two ways,
either positive or negative. If the government decided to take a fiscal stance when
the economy was underperforming and decided to decrease taxes this will show
growth within the economy. The reason why this is a positive is because it's good for
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