Question

Governments try to maintain the confidence of investors, business people, and consumers in their economies. Lost confidence causes companies to put off investing in new products and technologies, and to delay the hiring of additional employees. Interest rates and exchange rates play a large role in this confidence. Can central banks successfully influence these?

Answer 1

Answer:

When it arises to governments and companies relations, their contract is the most significant thing. The role of the government is somewhat extensively specified comprising providing security, favourable working environment among others just at it is directed to provide for the general public. On the other side, the companies are supposed to follow to their daily routine and request of paying revenues and taxes to the government and following to the rules and guidelines of the State. In this respect, the central bank is the main arm of the government in business and financial transactions, therefore it is still okay and the government through the central bank has the directive to stimulus all these in terms of indicting judicious interests and taxes, avoid over charging and theft, deliver grants and loans and offer general financial assistance. In this respect the government would played a key role through the central bank to the companies, investors, business enterprises among others.

Explanation:

The government can impact this through the central bank so as to control the flows of cash and revenues, provide financial support to the businesses through loans and grants so as to maintain and keep a good record with them on matters of business because the same businesses are part of the key sources of government income.