Describe the impact of government regulation.

Government regulation describes rules and laws that govern and oversee the operations of businesses. Government regulations also have a significant influence on the prevention of financial downtimes and tensions. They also restrict the consumption of land and water, and other public resources.

Government regulation has the following impacts;

1. Taxation and government spending. The money that the government spends emanates from taxation. An increment in taxes lowers investments. Government regulation is therefore required to create a balance between these two to curb adverse effects.

2. Determining interest rates. Policies initiated by the government impact the rates of interest.

3. Regulations, licenses, and permits. Laws by the government determine licensing policies and permits as well. This occurs mostly in the health sector to ensure fitness in consumable commodities.

4. Market catalyst. Government policies and regulations have a significant influence on social and economic market behaviors. These changes can be induced by the levying of taxes or the introduction of new technology.