Instruction: Explain each statement in 1 or 2 paragraphs.

(10 points

each)

1. Explain the role of government in managing the economy and economic development. You can
approach this topic from a historical perspective and describe the role of government in
economic history. Make connections of issues from the past and connect them with present
issues.

The government gives the lawful and social framework within which the economy operates, maintains
competition within the marketplace, provides public merchandise and services, redistributes income,
corrects for externalities, and takes certain activities to stabilize the economy. Within the early stages of
sustained development, government has frequently given the incentives for enterprise to require hold.
In a few economies the development of transportation, control, and other utilities has been carried out
by the government. Another important role governments have played within the early stages is to help
build up the sort of capital and money markets in which lenders might have confidence. Without
financial intermediaries acting as brokers between banks and business borrowers, it is difficult to
conceive financial growth taking put on a sustained and rapid basis.

Within the 19th century most liberal thinkers held that the most role for government in a created
capitalist system was that of a constable: to preserve law and order, maintain the sanctity of private
property, and provide business as much freedom as possible. The Great Depression of the 1930s
influenced numerous that a laissez-faire framework did not automatically give the necessary incentives
to the innovation and chance bearing basic for financial growth. This led to a great deal of writing on the
role that governments might play in stimulating growth. Economists have argued that, at the very least,
governments can embrace to avoid serious and prolonged recessions. Only in this way can a general
business psychology be created that assumes growth to be the natural course of things, so that
investment programs will pay off.

2. Define the place of small and family businesses in the economics of your state. What is their role
in modern business?

Family businesses contribute to the economies and social fabric of their communities, often forming the
steady business core. Although identified as family businesses, they may also be classified as
entrepreneurial or small businesses. Few empirical studies have approved the classification of either
group entrepreneur or small business based on one of a kind differences or contributions to economic
development over time. whether entrepreneurs or small business owners, in economic development
because each group makes important contributions to the long-term sustainability of its community’s
economic sector. The importance of small business to local communities is emotionally rooted in buying
and selling with friends and neighbors. The importance of small business in rural areas and big cities also
is seen in the economic benefits of shopping locally. Small businesses also present new employment
opportunities and serve as the building blocks of any corporation.
 3. Why is it important to know and understand economics even as a student?

Economics plays a part in our standard of living. Considering economics enables us to understand past,
future, and current models, and apply them to societies, governments, businesses, and individuals. As a
BSMA student, economics is a widely respected field of study and provides an alternative to an
accounting and finance degree as it offers similar career opportunities for a BSMA graduate. I could
work in job roles within a range of industries, such as: banking, finance, accountancy, business,
government, consultancy. It is very important to understand economics because economic issues
influence our day by day lives. This incorporates issues such as tax and inflation, interest rates and
wealth, inequality and emerging markets, and energy and the environment. A wide subject, financial
matters give answers to a extend of wellbeing, social and political issues that impact families and wider
communities.