1. The document discusses the impact of government investments on business firms. It outlines various ways governments can influence businesses through taxes, monetary policy, currency inflation, fiscal policy, bailouts, subsidies, tariffs, and regulations. 2. It explains how monetary policy, currency inflation, interest rates, bailouts, subsidies, and tariffs directly impact businesses and can skew markets. Regulations can also take away comparative advantages given by other policies. 3. The bottom line is that governments have significant power over financial markets and businesses through the tools of legislation, policy, and spending. A change in these areas can destroy companies and industries. Investors must consider legislative risk when evaluating stock investments.

1. IMPACT OF GOVERNMENT
INVESTMENTS ON BUSINESS FIRMS
PRESENTED BY :- ANSHU SHARMA(820002)
ANKUSH SHARMA(820003)
SHREYA(820024)

2. INTRODUCTION
• Government and business institutions in a country in many
ways are interrelated and interdependent. In today’s global
economy, businessmen and entrepreneurs are the driving
forces of the economy.
• For maintaining a steady and upward economic growth The
Government must try to make the environment for business
organizations suitable. And the organizations must follow the
laws of governments’ to run the businesses smoothly and
making sure there is a level playing field.

3. RELATIONSHIP BETWEEN
GOVERNMENT - BUSINESS

4. IMPACTS!..
Taxes
Monetary Policy: The Printing Press
Currency Inflation
Fiscal Policy: Interest Rates
Bailouts
Subsidies and Tariffs
Regulations

6. 1. GOVERNMENT & TAXES

9. How Government Influences the
Business Organizations
• The government attempts to shape the business
practices through both, directly and indirectly,
implementing rules and regulations.
• The government most often directly influences
organizations by establishing regulations, laws,
and rules that dictate what organizations can and
cannot do.
• To implement legislation, the government
generally creates special agencies to monitor and
control certain aspects of business activity.

10. IMPLICATIONS OF GOVERNMENT
DECISIONS ON BUSINESS
• The rate of interest is the price of money and
the key instrument of monetary policy.

11. 2. Monetary Policy: The Printing Press
Of all the weapons in the government's
arsenal, monetary policy is by far the most
powerful. Unfortunately, it is also the most
imprecise

12. 3. Currency Inflation
• Governments are the only
entities that can legally
create their respective
currencies. When they can
get away with it,
governments always want
to inflate the currency.

13. 4. Fiscal Policy: Interest Rates
• Interest rates are another popular
weapon, even though they are
often used to counteract inflation.
This is because they can spur the
economy separately from inflation.
Dropping interest rates via the
Federal Reserve—as opposed to
raising them—encourages
companies and individuals to
borrow more and buy more.

14. 5. Bailouts
• Bailouts can skew the market by changing the rules
to allow poorly run companies to survive. Often,
these bailouts can hurt shareholders of the rescued
company or the company's lenders.

15. 6. Subsidies and Tariffs
 Subsidies and tariffs are essentially the
same things from the perspective of the
taxpayer.
 In the case of a subsidy, the government
taxes the general public and gives the
money to a chosen industry to make it
more profitable.
 In the case of a tariff, the government
applies taxes to foreign products to make
them more expensive, allowing the
domestic suppliers to charge more for
their products.
 Both of these actions have a direct
impact on the market.

16. 7. Regulations
• The business world rarely
complains about bailouts
and preferential treatment
to certain industries,
perhaps because they all
harbour a secret hope of
getting some.
• When it comes to
regulations and tax,
however, they howl—and
not unjustly. What
subsidies and tariffs can
give to an industry in the
form of a comparative
advantage, regulation and
tax can take away from
many more.

17. The Bottom line is...
• Governments may be the most terrifying figures in the financial world. With a
single regulation, subsidy, or switch of the printing press, they can send
shockwaves around the world and destroy companies and whole industries. For
this reason, Fisher, Price, and many other famous investors considered legislative
risk as a huge factor when evaluating stocks. A great investment can turn out to be
not that great when the government it operates under is taken into consideration.