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There is a mutual relationship between business and government where the government regulates the environment in which business operates, and the businesses decide which government will be in place to influence their operations. Businesses look to the government to regulate or deregulate how they operate. This paper focuses on a news article on how raising interest rates helps fight inflation and high prices (Wile). The articles summary is based on government regulations to compact high inflation rates.
One significant way for the government to control high inflation rates is by Federal Reserve increasing the key interest rate. The article by Wile on the government fighting inflation and high prices outlines measures like Federal Reserve raising interest rates six times in 2022 to help fight inflation and get price growth under control. For example, when the interest rates are increased, the effect is passed to businesses that acquire loans via their respective banks. When businesses get loans at high-interest rates, the cost is transferred to the consumer through the high prices of goods and services.
The high-interest rates on loans limit how much businesses can borrow, limiting the flow of money into the economy hence controlling inflation. From the article, it is clear how government influences business via regulations because inflation on goods is a trade and geopolitical issue under the power of the entire government, not just the Federal Reserve (Wile). Therefore, the government is obligated to make and enforce favorable regulations that enhance business performance.
Based on the summary analysis of the article, the elected government makes policies to regulate or deregulate business operations. The effects of the policies are felt both by businesses and consumers, and they have the right to vote for the proper government that has policies to favor the operations of businesses. The article presents a perfect example of how government influences businesses.
Work Cited
Wile, Robe. How Raising Interest Rates Helps Fight Inflation and High Prices. NBC News, Web.
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