Why should governments support businesses?

Updated: Feb 11

Government supports entrepreneurship as they help it achieve their economic objectives, which are


  1. Economic Growth

  2. Low Unemployment Rate/High Employment Rate

  3. Balance of Payment

  4. Stable Price/Low Inflation


More businesses setup will encourage economic growth, as the firms will produce more product and services, increasing the output of the country's economy. While increasing more production, factors of production will have to employed, as such more labour will be needed, increasing employment. More products and services will provide more variety to meet the needs and wants of consumers and increase competition at the same time. This will ensure that price will remain low and competitive, while quality of product or services will be good.


As more output is being produce, firms may opt to expand their businesses abroad, by exporting their products. This will ensure a balance of payment.


PAST YEAR QUESTIONS


  1. Identify two reasons why a government might support business start-ups. (2 marks) May/June 2020/11

  2. Do you think the Government should help businesses? (6 marks) May/June 2018/11


RELATED CONCEPT


  1. Economic Growth

  2. Low Unemployment Rate/High Employment Rate

  3. Balance of Payment

  4. Stable Price/Low Inflation

How are related concepts relevant to why governments should support businesses? Leave a comment for discussion.