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Economy and Policy The nation's economic growth gets an additional boost when the government policies align with its Economic goal. The stock market,
the barometer of the economy, always responds to a significant policy change. Government policy is something that will determine the behavior of individuals and industries. For example, taxes on fixed deposit interest and no taxon long-term capital gains in a mutual fund encourage everyone to invest in the market rather than FD. The policy of tax rebates on interest in home loans encourages individuals to buy homes as early as possible. The economy is
deeply related to policymaking, and they go hand in hand to create abetter society and living standards for all.
Law of Supply & DemandTwo fundamental economic theories are combined in the law of supply and demand to explain how changes in the price of a resource, good, or service impact its supply and demand. Supply
grows as the price rises, but demand drops. In contrast, supply is constrained when the price falls and demand increases.
Law of Demand ● All else being equal, the law of demand states that demand fora commodity fluctuates inversely to its price.
In other words, as the price rises,
so does the degree of market ● Buyers' spending on a specific product or commodity is restricted since they have limited resources hence higher costs lower the amount desired. In contrast, as the
product gets more inexpensive, demand grows
●
As a result, demand curves slope downward from left to right. The income impact refers to changes in demand levels as a function of a product's price compared to purchasers' income or resources