Question

1. discuss the government's role in dealing with inflation.
2. Evaluate the difference s between starting a new business from scratch and buying an existing business.

Answer 1

Rat epositively. Please message if explanation is required

Answer to Q1. It is important for government to stabilize the rate of commodities to avoid uncontrollable inflation. Various policies has been prepared to stop the growth of money. High expenditure in economy is the main reason of causing inflation.

a. Govt by controlling open market operations can control the inflation

b. Monitory policy is the major tool of government to control the inflation in economy.

c. By increasing the requirement of reserves which commercial banks require to make with reserve bank of nation. If reserve will be low, money will circulate in economy and may cause inflation.

d. By increasing the tax rates will help in reduction of money and spending.

e.    By promoting more savings inflation can be controlled.

f. When country is having high inflation rate at that time government can spend less and can help in controlling inflation.

Answer to Q2. There are various differences between starting a new business from scratch and buying an existing business. Differences are mentioned below:

1. Difficulties in business: Starting a new business with scratch is having more disadvantage as it include difficulties of searching new line, new customer base, new market for business, funding cash, getting employees in Start-up Company. It is way easier in busing an existing business where everything is already set up.

2. Cash flow generation: A new business will take few months to few years in generation of cash flow whereas existing business is generating regular cash flow.

3. Building Reputation & Trust among customer & Employee: It takes time and energy for start up business to build reputation of business and trust among its customers & employees. An existing business already possess reputation and trust among customer and employee.

4. Funding from banks: It is not easy for start up to arrange funds for business from banks. As 80% of start-ups fails in initial stage so bank don’t take risk in funding the same. An existing business have all set up and turnover history and relationship with bank. It is easy to get loans for existing business.

5. Building a brand name: Building a brand name takes years. In existing business we het brand name and can start working immediately with its reputation.