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This will alleviate problems such as unemployment, poverty and the society would become stable and grow immediately. Now if the government makes drastic changes or cuts during the time of recession especially in tax rates, each person will get to save more money to spend and will lose less to taxes. In times of recession the main motive is to simulate the economy by encouraging people to spend more hence inducing an increase in aggregate demand. But this is usually not the case under recession when people tend to save the money and thus there is less liquidity in cash flow. This thereby worsens the economic situation. Hence the government can take to get involved in political as well as social welfare policies in order survive through situations like the recession.

Macroeconomic policy measures

An organisation does not directly or regularly interact with the macro environment which plays a vital role in learning about macroeconomic policies of any organisation. Forces in a macro environment are less controllable than the micro environment. Two such macroeconomic policies are discussed below

Taxation and work incentives

Taking into account the impact of increase in income tax, the rise in tax has a ill effect of reducing the income of those in work because of the reduction in total net income after tax. This will make the worker work more hours to achieve the target income. On the other hand, this might also cause the worker to work less since it may bring down his moral to work.

Taxation and labor productivity

We can argue that taxes levied could have a positive impact on the society because it increases the intensity with which people work. But there is little evidence to support this view. Many other options can improve productivity but completely ignoring the positives and negatives of tax related benefits on productivity is not possible.

The market environment

Markets functions in environment which may or may not suit their business. Markets are set up after studying the environment around which they are going to functions. There are various types of markets but and are broadly classified as

Perfect market and Imperfect market.

In a perfect market there is ideal condition for business. Although this is not practical still this is used as a standard. A market is said to be a perfect market if it has the following conditions.

Market information available must be shared with everyone in the market without any bias.

No single person has the power to set prices in the market.

A person may enter and exit the market on his own will.

All the latest technology must be given with equal access to all the traders.

In an imperfect market, which normally prevails in the world there are various sub categories. A few are mentioned below.

Monopoly is said to occur in a market which has only one seller.

Oligopoly said to occur in a market which has a small number of sellers.

Monopsony said to occur in a market which has only one buyer.

Oligopsony said to occur in a market which has a small number of buyers.

Supply and Demand Factors

In any given market the supply and demand may vary due to various reasons. The price of any good in the market