The economy is an interconnected system in which a business cycle runs. Not only a business cycle but it also includes the economic activity of consumers as well. In fact, consumers are the rulers of the economy. Both the firm and consumer sides are important to run an economy. There is another institution that has a huge role to play in the economy. STATE. No doubt, the state is known to be the tool that can regulate an economy. It is believed that developed countries achieved prosperity because of the free markets. But the story does not end there. Regulations play a vital role in the economy. Here, regulations mean that an economy needs to be protected from criminal activities like black money. State’s involvement is also important to give justice to people of all the classes living in a society.
Are regulations good for economy?
It is also true that regulations may have a negative impact as well. In countries where the state implements strict rules over economic activities, people do not invest easily which is a major drawback of state regulations. Additionally, it is also thought as so much hassle for the foreign investors to invest in the country. So, there are both good and bad impacts of regulations on the economy of a country.