How governments can influence the economy

Governments try to stabilise the economy by maintaining good growth, high levels of employment, and balanced inflation. This can be done via fiscal policy by the government and monetary policy by the Reserve Bank 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 …

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