Types of Government Policies

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Types of Government Policies :

-Administered prices: In certain cases the government of a region might want to make essential goods available to all it's people since the prices might be either rising very rapidly or they can't be afforded by most of the people in such case the government imposes a fixed price for the products.For example in socialist countries the prices of all the necessary goods like food clothes etc. are fixed by the government.

-Aid : When a country is in a very bad position on order to help it other countries offer it food clothing or cash.This is called as aid. It can be observed that countries affected by natural disasters receive aid from several countries in the form of emergency relief material and funds for reconstruction.

-Competition policy : In order to ensure that no company is using unlawful means to defeat it's competition countries introduce competition policy. It also serves the interest of the consumers who can avail the benefit of having two different producers. For example if a company uses unfair trade practices like using it's influence to make sure that it's competitor doesn't win a contract then this type of practices might result in the eventual elimination of the affected company .in the end the ultimate losers will be the consumers since they will be forced to buy products from a single company and they will have to pay whatever price it asks.

-Subsidies : If the prices of a product are unaffordable to people then the government might offer subsidies to that particular product. It will bear a part of the cost of the product and the consumer will have to pay only the balance of the price. For example in order to encourage solar energy the government might offer subsidies on solar equipment.

-Deregulation : This is the reversal of administered price mechanism. That is the removes it's control fever the production and prices of particular goods like for ex: medicines.

-Disinvestment : This is the process in which the government sells a stake in a company which it owns(either partially or fully).

-Managed Currency : This is the state in which the government through it's central bank controls the exchange rate of it's currency. That is there is excess foreign currency in the foreign exchange then the value of the local currency vis a vis the foreign country might go up so in order to prevent this the central bank buys the foreign currency from the market thereby reducing it's supply. Thus in this way the local currency is prevented from appreciation. Since if it appreciates the exports will be hit since the prices of the exported goods will increase.

- Minimum wages : In order to protect people from exploitation by their employers the government fixes a minimum wage to be paid for a person for any job. this will ensure that all employed are able to afford the basic necessities for living.

-Privatisation : This is similar to disinvestment . This is the process in which the government sells it's entire stake in a company which it owns(either partially or fully).

-Fiscal Policy : This is the budgetary policy of the government this includes decisions to lower
taxation, vary public expenditure etc .Increasing tax rates or reductions in public expenditure is called fiscal tightening. Whereas the decreasing of tax rates or the increase in public expenditure is called fiscal loosening.