Government Fiscal Policy Assignment Help

Assignment Help: >> Determinants of Supply - Government Fiscal Policy

Government Fiscal Policy (Taxes and Subsidies):

Taxes increase cost of supplying a product and anything that causes the cost of supplying a product to increase in turn causes a decrease in supply of the product whiles subsides decrease of the cost of supplying a product and hence cause an increase in supply.

Weather and other Natural Phenomena:

Changes in weather affect the supply of certain commodities especially agricultural products.   A favourable weather condition such as good rainfall will increase the supply of agricultural products whiles an unfavourable weather such as drought will cause a decrease in the supply of agricultural products.  Other natural phenomena such as, floods, bush fire, pests and so on also affect the supply of agricultural products.  Other natural phenomena such as floods, bush fire, pests and so on also affect the supply of agricultural products.

Population of Suppliers or Firms:

When firms in an industry are earning supernormal profits, this may attract new firms into the industry (if it is not a monopoly industry) which would in turn increase the supply of the product.  On the other hand, if more firms exit an industry, this could cause supply to decrease.

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