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Complete 6 pages APA formatted article: Business Environment of the UK. Changes in prices change the production and consumption patterns and this system is dominated by private individuals and firms. On the other extreme, we have a command economy system (John Sloman, 2002). This system is dominated by the government’s rules and regulations and the government decide where to allocate resources, what to produce, how to produce and ration the produced resources accordingly. If we look at the economic system that is being followed in our Country (i-e England), we can clearly see that we follow a system that is a mixture of both private ownership and government control. This system is known as a mixed economy and it combines the positives of both free-market and command economy. Like us, all the major countries like USA, Canada and France use this system. This system is considered as an ideal system for the businesses to thrive and government control establishes stability in the system.

Macro-Economics concerns the working of an economy as a whole. It provides various aims to the economy to work towards. Generally, these macro-economic aims include Low inflation, Low unemployment, price stability and keeping balancing of payment. However, more often than not, the economy moves away from these aims. To bridge this gap the government takes certain measures and actions. These actions are also known as instruments of macro-economics aims. England uses the following instruments to fulfill the macroeconomic aims. (McConnell and Brue, 2000)&nbsp.In this case, the government usually raises the interest rate and reduces the money supply in the economy. This is known as the deflationary monetary policy. When the government uses this policy, less money is pumped into the economy and people now have less money in their hands to spend. Similarly, higher interest rates discourage them from borrowing from banks and this curtails their spending. When demand goes down, prices come down and inflation is taken care of. This policy also affects the business in an adverse way. When the government follows this policy, the businesses experience fall in their sales and some businesses might close down due to plummeting demand that this policy may lead to. On the other hand, when England is going through a period of recession, the government helps by starting an inflation fiscal policy to increase the aggregate demand in the economy. The lower interest rates and increase the money supply in the economy. As a result of this policy, people have more money to spend and businesses flourish as a result of high demand which is brought about by more supply of money in the hands of people and their ability to borrow money increases due to lower interest rates. This is how England’s government uses monetary policy to stimulate aggregate demand. (Lipsey, 2003)

Another instrument used by the government of England is fiscal policy. This includes varying tax rates and changing government expenditures in the economy to achieve desired targets. The Government of England usually increases taxes rates and lowers expenditure when faced with inflation. It again reduces the money that people have.&nbsp.As a result, they have to go without some goods. Business suffers when taxes are high and government expenditure is low because people in these periods have less to spend and they experience a fall in demand for their products and vice versa.&nbsp.