How the government can affect the economy

Governments try and stabilize the economy by maintaining good growth, high levels of employment, and balanced inflation. This can be done through fiscal and monetary policy to influence the prices of goods and employment. The state of the economy has a direct impact on the stock market as it would affect the ability of companies in generating profits. Expansionary policies can lead to increased demand and employment. This in turn can lead to more spending which then increases earnings for …

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