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The effects of government policy on economic behavior

What are the effects of government policy on economic behavior?

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Government policy has a profound impact on behaviour of economy. Broadly one can have three kinds of policies:

1. Capitalist system
In a capitalist system businesspeople decide how to produce efficiently, guided by their desire to make a profit.

2. A socialist system, price and production are determined by government.
Thus in capitalism, "how to produce" is determined by business people's desire to minimize cost and maximize profits; in socialism, it is determined to a much greater degree by government. Hence ...

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The effects of government policy on economic behavior are articulated.

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