Question

To what extent can the government / Central Bank influence the macro-economy? ​

Answer 1

Answer:

Government policy has microeconomic effects whenever its implementation alters the inputs and incentives for individual economic decisions. These changes come in many forms, including tax policy, fiscal policy, regulations, tariffs, subsidies, legal tender laws, licensing, and public-private partnerships (to name a few). These policies manipulate the costs and benefits that individual actors face in nearly every facet of modern life.