Business Environment Essay Example | Topics and Well Written Essays - 2000 words - 1

Business Environment - Essay Example Therefore, it is sound to assert that the variations in demand and supply for any economic resources, and the country’s practices contribute to its growth and competence at a global platform. The following discussion seeks to highlight economic perspectives in different versions with reference to their effects to the economic environment. P4: Explanation of how economic systems attempt to allocate resources effectively Despite the two country’s economic practices, UK practices the mixed enterprise approach whereby some resources belong to the national government thus limiting any probable exploitation of the citizens (Dransfield, 2004, p. 98). For instance, the country owns majority of the shares in those firms operating in products, which seem critical for human welfare. Such a resolution enables the UK to expressly influence companies’ decision-making processes in for the benefit of the citizens’ benefit. Further, the UK is able to use the mandate expres sed by its constitution’s to influence the privatization of companies in order to create wealth to the citizens. Individuals own the remaining resources, but there are regulations enforced by the government to ensure that that the practices are ethical and beneficial to the citizens. On the contrary, the military command economy restrains the local population from the exclusive indulgence into businesses that may lead to the exploitation of resources for economic prosperity. Arguably, the country owns 95% of the industries leaving a 5% margin for its citizens. The socialist approach thus tends to practice a monopoly approach in the allocation of resources, a factor that deters increment in the GDP and leads to increased poverty levels. Economists explain that U.S.A sets an analytical approach to the economic issues and establishes fiscal policies to stimulate growth, control amount of money in supply, dictate inflation rates of the dollar, and subsequently reduce the unemploy ment levels. The United States is observant on whether the factors will affect the country positively or negatively in the end (Arnold, 2007, p. 55). Analysts describe that the US free market enterprise economy allows for the room of innovation thus; the country’s entrepreneurs have the ability to improve products that in turn lead to economic growth since they are able to earn returns on their investments, create employment, and remit taxes to the federal government (Rodrik, 2007, p. 67). P5: The impact of high taxes and high interest rates The influence of high taxes on employees is a factor born from the Keynesian theory. Theoretical arguments are that enforcement of high taxes to a country’s employee population is a significant approach to reducing the rate of inflation since the approach diminishes the rate of individual expenditures. The factual further increases productivity in the economy since the government’s accrued revenues are spent on utilities suc h as infrastructure, and the provision of other resources to the entire population (Arnold, 2007, p, 58). The approach is significant in shaping up an economy in accordance to changes in demand and supply with a perception that whenever the supply shifts to an increase or decrease, the prices will remain constant since the population will bear the existing ability to purchase a given quantity of a product. On the other hand, the impact of executing high interest to business organizations remains an ill