What is economic intervention?
Economic intervention is when the national government takes steps to change the economy for political purposes. In a free market economy, individuals and businesses have the ability to act in their own interest. The property ownership is protected by the courts so that individuals do not have to worry about the loss of their goods to other individuals. Hmuish amounts of economic intervention will lead to a mixed economy where government agencies will play a greater than a normal role in the economic planning of a nation. Types of economic interventions or planning include minimum wage laws, ability to combine workers, price checks, tariffs or import quotas and deductions of tax or credits. Governments often use these plans to create an economy without unfair competition, which is the inability of one individual to achieve the same level of economic wealth as the anothai. Severe economic intervention will often lead to a centrally planned economy, such as socialist or communist societies. These economies are spolThey are on their government to direct the economy as needed and provide resources by specific purposes.
Free market economies often experience a concept known as a business cycle. It is a natural period of expansion and contraction based on changes in the free market economy. Expansion occurs when consumer demand increases for specific goods or services. Extensive expansion often leads to the growth of the gross domestic product of the nation, which is the sum of all products made inside the nation. Contraction occurs when demand decreases or resources become rare, reducing the supply of goods produced by companies. Although natural, these contractions can cause the most economic intervention of the government.
Governments often try to create politicians during economic contractions to alleviate the wound of economic problems. However, the free market is generally corrected even if it may not occur so RYBread as individuals can wish. In addition, politicians carried out during economic intervention will still exist after the economy has been remedied, which will lead to other rules for societies and individuals to adhere to themselves in the economy. This falls into the theory of unintended consequences, where government interventions - although well -meaning - will have an effect that hinders the economy in the future. However, individuals may prefer this intervention if it supports a socially responsible environment regardless of the costs for companies.