What are the effects of government policy on economic behavior?
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 ...
The effects of government policy on economic behavior are articulated.