Question

1. Why is it important for businesses to monitor government policy?

a. Rules and regulations are periodically revised.
b. It is the machinery that regulates government.
c. It provides rulings that resolve existing disputes.
d. It can be overwhelming and very technical.

Answer 1

Monitoring government policy is critical for businesses as it affects market conditions, hiring practices, and compliance costs, and shapes the operational environment by acting as the 'rules of the game' in the economy.

Step-by-step explanation:

It is important for businesses to monitor government policy because government rules, regulations, and the actions of social institutions can significantly influence market dynamics and the labor market. For instance, regulations can deter companies from hiring by creating bureaucratic hurdles, requiring numerous permits, imposing fees, and imposing restrictions on product quality and types. Zoning laws might limit where and when businesses can operate, and regulations overall determine the 'rules of the game' within which businesses must function. Meanwhile, underground economies can emerge in heavily regulated environments, where transactions occur outside governmental oversight.