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Types of economic system and how policies effect organizations

In this record I have outlined Economic systems, type of Economies System, Federal government Intervention and Policies, Fiscal & Monetary Regulations influence a business, International Trade, Importance of International Trade, EUROPE (European union), An Organization in UK - Bristol & Western Lender, Economic Implications for the united kingdom of entry into EMU. To describe the above mentioned factors I've used more illustrations and ideas for the reader to comprehend cleary about these factors and its mainly in Sri Lanka's financial system.


I wish to say thanks to my lecturer Ms. Vindya Welivitiya who helped me to inaugurate and develop this task. She also made sure that her students in the school understood the topic and provided her best. She was ready to help us if we consulted her and provided her best support to us.

I would also prefer to give thanks to very specially my family and friends who made a huge contribution with their encouragement and support throughout this project.

Irushi Dulangi Hettige

July 2010

Table of Contents

Economic Systems

An economical system is the system of production, distribution and ingestion of goods and services of economy. Alternatively, it's the set of key points and techniques by which problems of economics are dealt with, including the economic problem of scarcity through allocation of finite beneficial resources. The monetary system is composed of folks and corporations, including their associations to productive resources, such as through the convention of property. Examples of contemporary economic systems include capitalist systems, socialist systems, and combined economies. "Economical systems" is the economics category that includes the analysis of particular systems.

The fundamental economical problem in virtually any world is to provide a set of rules for allocating resources and usage among those who can't satisfy their wants, given limited resources. The guidelines that each monetary system provides function within the construction of formal institutions (e. g. , regulations) and casual establishments (e. g. , traditions).

In every nation, regardless of what the form of government, what the kind of economical system, who regulates the government, or how wealthy or poor the country is, three basic economical questions must be responded. These are:

What and how much will be produced? The different outputs could be produced with society's scarce resources. Some mechanism must can be found that differentiates between products to be produced and others that stay as either unexploited innovations or as individuals' unfulfilled needs.

How might it be produced? There are many ways to make a desired item. It might be possible to use more labor and less capital, or vice versa. It may be possible to utilize more unskilled labor to substitute for fewer systems of skilled labor. Choices must be made about this input mix, the way the inputs should be prepared, how they are brought jointly, and where the production is to occur.

For whom might it be produced? Once a commodity is produced, some mechanism must are present that distributes completed products to the best consumers of the product. The device of distribution for these commodities differs by financial system.


Capitalist economical system, individuals own all resources, both individual and non-human. Government authorities intervene only minimally in the operation of markets, primarily to protect the private-property rights of individuals. Free markets in which suppliers and demanders can go into and exit the market at their own discretion are key to the capitalist economic system.

What and how much will be produced? How will it be produced? For whom might it be produced?

In a capitalist system, individuals own resources, either through inheritance or through industry. The average person receives compensation for the utilization of resources by others. This, combined with inherited riches of the person, determines an individual's spending vitality. The gathered spending electric power and the determination of people to allocate resources to consumption determine demand. The availability and costs of resources, together with the potential for profits of businesses, determine source. In a market system the demand of consumers combined with the supply of suppliers determines what and exactly how much will be produced.

Because of the economic competitiveness of the market system, the lowest-cost production method will be used. If anything apart from the lowest-cost creation method had been used, a rivalling firm would have a motivation to enter production to earn a greater profit and could afford to sell at a lower price, thus driving a vehicle the original firm out of development. Consumers could then purchase more of the product at a lower price, allowing their limited resources to get more.

Production will be allocated to people that have available resources and a determination to acquire the result of production. These buys then become information for suppliers in deciding what and exactly how much to create in the future.

Thus, genuine capitalism is an economic system based upon private property and the marketplace where in theory individuals decide how, what, and for whom to produce. Under capital ism, individuals are encouraged to follow their own self-interests, as the market pushes of resource and demand are relied upon to coordinate economic activity. Syndication to every individual is matching to his or her ability, work, and inherited property. Usually the economies of Canada, america, and Western European countries are considered to be capitalist.


Socialist monetary system, individuals own their own individuals capital and the federal government owns most other, non-human resources that is, the majority of the major factors of creation are managed by their state. Land, factories, and major equipment are publicly owned or operated.

What and exactly how much will be produced? How might it be produced? For whom might it be produced?

A socialist system is a form of command economy where prices and creation are established by the state. Movement of resources, like the motion of labor, is strictly controlled. Resources can only move at the way of the centralized planning power. Economic decisions in what and exactly how much, how, and for whom are all made by the state through its central planning businesses.

In theory, socialism is an economic system centered upon the individual's good will toward others, rather than function of his or her own self-interest. Socialism attempts to impact individuals to take other's needs into consideration and to adapt their own needs relative to what's available.

In socialist economies, individuals are urged to consider the well-being of others; if individuals don't react in a socially advisable manner, the federal government will intervene. In practice, socialism has become an financial system predicated on government possession of the method of production, with economic activity governed by central planning. The economies of Sweden and France are examples of a socialist financial system.


Communist economic system, all resources, both human and non-human, are held by the state. The government takes on a central planning role directing both creation and utilization in a socially desirable manner.

What and how much will be produced? How might it be produced? For whom will it be produced?

Central planners forecast a socially beneficial future and determine the creation had a need to obtain that outcome. The central planners make all decisions, guided with what they believe to be good for the country. The central planners also allocate the creation to consumers based on their examination of the individual's need. Basic human needs and desires would be achieved based on the Marxist theory, "From each matching to his capability to create, to each according to his need. "

The economies of China, the past Soviet Union, and the ex - East Germany are types of communist economies.

Countries have scarce resources. The economic systems of countries are made to allocate those resources, by having a creation system, to provide productivity for their people. The essential questions that these systems answer are:

What and exactly how much will be produced?

How might it be produced?

For whom will it be produced?

Market economies leave the answers to these questions to the dedication of the makes of resource and demand while command economies use a central planning firm to direct the activities of the economy. Pure capitalist economies are market economies in which the role of authorities is to ensure that the possession of the resources used in production are privately performed. Socialist economies are mainly control economies where most non-human resources are held by their state but human being capital is possessed by the average person. Communist economies are also control economies but all resources, both individuals and non-human, are owned or operated by the state.

In practice, all economies are in reality mixed economies, combining some areas of both market and order economies. The comparative importance of the particular economic system in the country is the determinant of the kind of economic system that it's generally regarded as.

Type of Economies System

Three types of economical systems exist, each with the own disadvantages and benefits; the marketplace Current economic climate, the Planned Market and the Mixed Overall economy.

An financial system is loosely defined as country's arrange for its services, goods produced, and the precise way in which its monetary plan is completed. Generally, there are three major types of economic systems prevailing around the world.

Market Economic System

In market economy, countrywide and state governments play a role. Instead, consumers and their buying decisions drive the economy. In this kind of monetary system, the assumptions of the marketplace play a significant role in deciding your path for a country's financial development.

Market economies aim to reduce or eliminate entirely subsidies for a specific industry, the pre-determination of prices for different goods, and the amount of regulation managing different industrial industries.

The absence of central planning is one of the major features of this monetary system. Market decisions are mainly dominated by supply and demand. The role of the federal government in market current economic climate is to simply ensure that the marketplace is steady enough to handle its economic activities properly.

Planned Economic System

A planned overall economy is also sometimes called a command line economy. The most important aspect of this type of market is that major decisions related to the development, distribution, commodity and service prices, are all made by the government.

The planned overall economy is federal government directed, and market forces have very little say in this economy. This type of economy lacks the type of flexibility that is present a market economy, and as a result of this, the planned overall economy reacts slower to changes in consumer needs and fluctuating patterns of supply and demand.

On the other hand, a planned current economic climate aims at using all available resources for growing production instead of allotting the resources for advertising or marketing.

Mixed Economic Systems

A mixed economy combines elements of both the planned and the marketplace economies in a single cohesive system. This means that certain features from both market and designed economic systems are taken up to form this type of economy. This system prevails in many countries where neither the federal government nor the business enterprise entities control the financial activities of this country - both areas play an important role in the economical decision-making of the country. In a blended economy there may be flexibility in some areas and federal control in others. Merged economies include both capitalist and socialist financial policies and frequently happen in societies that seek to balance a wide range of political and financial views.

Economic System of Sri Lanka

The Constitution of Sri Lanka establishes a democratic, socialist republic in Sri Lanka, which is also a unitary point out. The government is an assortment of the presidential system and the parliamentary system.

Elaborating the economical system in Sri Lanka it could be categorized under blended financial system as resources & factors of production are owned by both private sectors (Capitalism) & state ownership (Socialism). Market socialism identifies various economical systems in which the government is the owner of the economic establishments or major establishments but operates them based on the rules of resource and demand. In a traditional market socialist market, prices would be determined by a federal government planning ministry, and companies would either be state-owned or cooperatively-owned and monitored by their workers.

Infra-structure & other open public goods (free education & health, streets bulbs, subsidies) are being provided by the federal government.

Supporting services like bank & financial services are given by both private sector (Commercial Loan provider, Eagle Insurance. etc) & the government (State banks such as people's loan provider, BOC)

Private sector also consists of in providing same goods like education & health at a cost.

E. g. : Private hospitals like Nawaloka, Asiri & Private schools.

Prices are chose & resources are allocated in the free market, by demand & resource forces.

Government intervenes in establishing maximum prices. etc.

Government play a essential role in the monetary system by setting rules & restrictions (Functions)

Exchange rates are made a decision by market causes, federal government intervene in special occasions.

Few of the three important questions in economy ( how & whom to produce) are solved by the government according to the resources distribution (top priority on poor bulk) thus it gives private sector the opportunity of satisfying need & allocate resources among people whom they can charge a cost.

What monetary system suites better to Sri Lanka? In personal point of view.

As discussed earlier Sri Lanka's prevailing monetary system is blended current economic climate, means both private possession as well as their state takes part in the means of production, distribution and other styles of economic activities. Government works the major role throughout the market while private sector also involves in economical activities. This is really a common economical system commonly found in a great many other developed & producing countries. Thus it is a good suitable monetary system to a country like Sri Lanka. Besides it should be more accurate & productive in useful performance. In my own perspective this monetary system should be preserved in Sri Lanka with an effective intend to help the monetary wellness of the united states.

The government authorities & functions should be more efficient. They can combine government authorities with private sector companies to get an improved output. There are several ways of affecting private sector in development & infra-structure providing jobs ( BOO, BOOT, MOT, and BOT methods).

Government Intervention

Government involvement is a couple of actions on the part of federal that affect economical activity, source of information allocation, and especially the voluntary decisions made through normal market exchanges. Federal government, by its very character, is designed to intervene in voluntary market activity. Some of the more prevalent types of federal government intervention include taxes, price settings, assorted laws, and control over federal government spending. The general justification for government intervention is that voluntary decisions by consumers and businesses neglect to achieve efficiency or other goals considered important by modern culture.

What will be the reasons for Federal government Intervention?

Government should intervene in financial activities where private sector fails to successfully allocate resources to achieve the biggest possible consumer satisfaction. The four main market failures are general public good, market control, externality, and imperfect information. In each circumstance, market acting without the government imposed route, does not direct a competent amount of the resources in to the production, syndication, or ingestion of the good.

There are two major reasons why government involvement is important.

to overcome market failure

to overcome market power

Overcoming Market Failure

Provision of public goods & services. Private sector doesn't provide general population goods as they can not charge a price from the public for use.

Externalities in development. The price tag on positive & negative externalities of creation & ingestion doesn't use in final outputs, so the government includes by levying taxes & allowing subsidiaries to overcome externalities.

The price system & the redistribution of income. Placing least & maximum prices, price control, income dutyetc

Maintaining competition & efficient learning resource allocation.

Managing the whole economy & lessening financial fluctuations.

Overcoming Market Power

Price Fixing

Price discrimination

Vertical & horizontal agreements


Primary & secondary boycotts



Government Policies

Fiscal Policy

Fiscal policy refers to government makes an attempt to impact the way of the market through changes in government taxes, or through some spending (fiscal allowances). The two main instruments of fiscal insurance plan are administration spending and taxation. Changes in the level and composition of taxation and authorities spending can impact on the following factors throughout the market:

Aggregate demand and the level of financial activity;

The pattern of source allocation;

The circulation of income

Monetary Policy

Monetary policy is the procedure by which the federal government, central bank, or monetary expert of the country control buttons the way to obtain money, availability of money, and cost of money or interest, in order to attain a couple of objectives oriented to the growth and steadiness of the market. Monetary theory provides information into how to craft optimal monetary policy. Monetary plan rests on the partnership between the interest rates in an overall economy, that is the price at which money can be borrowed, and the full total way to obtain money. Monetary plan runs on the variety of tools to control one or both of these, to influence results like economic development, inflation, exchange rates with other currencies and unemployment.

Foreign Exchange policy

Policy of federal towards the amount of the exchange rate of its money. It may want to affect the exchange rate by using its gold and foreign currency reserves placed by its central loan provider to buy and sell its currency. Additionally, it may use interest rates (monetary plan) to alter the worthiness of the money.

How do Fiscal & Monetary Procedures influence a business?

Fiscal Policy

Taxes & federal spending will be the key drivers behind this coverage. They can impact organizations in a number of ways.

There are two types of taxes as Direct taxes & Indirect fees. Indirect taxes (e. g. VAT) can influence on increments in prices of good & services, especially prices of materials & inputs (Olive oil price) & import taxes on materials can effect on prices. Increasing prices can de-motivate customers & consumption; finally this may lead to less demand & less revenue for organizations.

Direct taxes (Tax) can also affect an organization's employees. When income tax rates are increased people will have to spend a greater part off their earnings to the federal government. Employees can be de-motivated & perhaps they will make efforts to work more with the intent to earn more to hide what they lose as taxes, this might add additional cost to the organizations (overtime repayments). Besides, commercial income taxes can also impact organizations.

Another equipment is fiscal policy is authorities spending. In Sri Lanka administration expenses can be shown as military services bills, allowing subsidiaries, free education & health, building infrastructure, spending money on government staff & maintaining nonprofit generating essential service authorities, parliament bills & wages for customers of the parliament. . etc

These expenditures are decided & money are allocated by gross annual budgets. Authorities can prioritize some expenditures & cut off many others. These decisions can influence on organizations. For example if an organization is being highly performed with a federal subsidiary & when administration decides to lessen or take off the subsidiary it can make negative results in that group functions. Thus when federal spends more on armed forces & protection some basics (infrastructure, education) will have fewer cash; therefore both private & public organizations may have downfalls in their business activities.

Monetary Policy

As mentioned earlier, monetary insurance policy is the procedure by which the federal government, central bank or investment company, or monetary expert of the country controls the supply of money, option of money, and cost of money or rate of interest, in order to realize a couple of objectives oriented into the growth and stability of the economy. Controlling money resource makes major effects on organizations, mainly financial institutions & lenders. Governments take several steps to regulate money source such as wide open market operations, interest. By reselling & purchasing securities in the open market government can make changes in the amount of money source in a country. When the amount of money supply is high in an economy more income circulates & purchasing electric power of rises.

International Trade

International trade is exchange of capital, goods, and services across international edges or territories. Generally in most countries, it presents a significant share of gross local product (GDP). While international trade has been present throughout much of background (see Silk Street, Amber Street), it's economical, social, and political importance has been on the rise in recent decades.

Industrialization, advanced transport, globalization, multinational organizations, and outsourcing are having a major effect on the international trade system. Increasing international trade is crucial to the continuance of globalization. Without international trade, countries would be limited by the products and services produced within their own borders.

International trade is within principle not different from local trade as the drive and the behavior of parties involved with a trade do not change fundamentally whether or not trade is across a boundary or not. The primary difference is the fact that international trade is typically more expensive than local trade. Associated with that a border typically imposes additional costs such as tariffs, time costs anticipated to border delays and costs associated with country dissimilarities such as words, the legal system or culture.

Another difference between local and international trade is the fact that factors of development such as capital and labour are typically more mobile in just a country than across countries. Thus international trade is mostly restricted to operate in goods and services, and only to a lesser scope to operate in capital, labor or other factors of development. Then trade in goods and services can serve as an alternative for trade in factors of development. Rather than importing a factor of creation, a country can transfer goods that make intense use of the factor of development and are thus embodying the respected factor. An example is the import of labor-intensive goods by america from China. Rather than importing Chinese labor the United States is importing goods from China that were produced with Chinese labor.

International trade is also a branch of economics, which, together with international finance, forms the bigger branch of international economics.

Importance of International Trade

International trade is that kind of trade that gives climb to the market of the world. On this the demand and offer and the costs are influenced by the global events. For example, the change in political conditions in Asia can increase production cost and cost of labor of American company situated in a country in Asia. This would then result in increase in the price tag on the product that you need to obtain a local. When there is a reduction in cost of labor, on the other side you might need to pay relatively less amount on the merchandise.

Global trading provides countries and consumers the opportunity to come in contact with those services and goods that aren't available in their own country. Clothes, food, jewelry, stocks, wines, extra parts etc. and so many more products are available in international market. Trading of services is also done like: banking, consulting and vehicles, tourism. The products and services that are bought from the global market are called imports and the goods and services that can be purchased in the international market are called exports. Exports and imports are registered in a country's balance of repayments (current accounts).

International trading allows the developed countries use their resources effectively like technology, capital and labor. As much of the countries are gifted with natural resources and different investments (labor, technology, land and capital), they can produce many products more effectively sell at cheaper prices than other countries. A country can buy an item from another country if it cannot effectively produce it within the national boundaries. This is actually the niche of international trade. Global trading allows the various countries to take part in global economy motivating the foreign immediate investors. These individuals invest their money in the foreign companies and other property. Hence the countries may become competitive global individuals.

International trading has become very important for each country of the world - be it big or small, developing region or developed country. The idea of globalization started way back 1980, developed due growth of technology in areas transportation and communication.

Another stimulating aspect is the fact that the indegent and developing nations try hard to overcome the competition also to satisfy the needs of the clients overseas. An increase from significantly less than 25 percent to eighty percent has been noticed following the initiation of globalization. The major contribution is made by the countries like Hungry, China, Mexico, India and Brazil.

Economic Integration

Economic integration identifies trade unification between different says by the partial or full abolishing of customs tariffs on trade occurring within the borders of each status. This is recommended in turn to lead to lower prices for marketers and consumers (as no customs obligations are paid within the integrated area) and the target is to increase trade. The trade excitement effects intended through economic integration are part of the contemporary financial Theory of the next Best: where, in theory, your best option is free trade, with free competition and no trade barriers whatsoever. Free trade is cured as an idealistic option, and although understood within certain developed claims, monetary integration has been regarded as the "second best" option for global trade where obstacles to full free trade exist.

Global Market

The activity of buying or selling goods and services in every the countries of the world, or the worthiness of the goods and services sold. Global marketing is simply marketing to the whole world and eliminate the dissimilarities between barriers and meet up with the expectations of varieties of consumers all around the globe. Marketing contains establishing connections with others through planning, execution and successful circulation of goods to satisfied consumers.

Some of the very most successful companies to attain global marketing include car manufacturers such as Toyota, Ford, Honda, Basic Motors, and Volkswagen. These companies all started as small entities in their own countries and eventually achieved successful global execution. New companies have modern marketing tools to help them achieve successful global marketing. The internet and e-commerce immediately makes a company a global business.

Since the internet is a world-wide entity, a small company based in South Dakota can easily reach customers in China with the click of an mouse. Customers can actually come from anywhere.

Successful global marketing was not achieved over night for companies. Global marketing is an activity just like other aspects of marketing. Usually a business starts out with a little export platform. They work hard to achieve home marketing first and then they begin tackling the rest of the world. Some companies take on the small export base and they don't get any more following that. Global marketing is more than just exporting goods overseas; it is prosperous implementation of a product into a foreign trade market. Marketing decisions are made at the house front and directed overseas and expected to sink or swim. The foreign customer is completely different from the domestic customer. Language obstacles, customs paperwork, and delivery costs deter many companies from becoming global entities.

The EU (European union)

Main feature of the EU

Number of Associates : 27

Aims & goals

Mainly its purpose is peace, prosperity & independence for the individuals in all the account countries, in a fairer & safe world.

The European union charter has mainly set 10 key areas that European union support & action, those areas are as uses

Education and training for entrepreneurship

Cheaper and faster start-up

Better legislation and regulation

Availability of skills

Improving online access

Getting more out of the Single Market

Taxation and financial matters

Strengthening the technical capacity of small enterprises

Making use of successful e-business models and producing top-class small company support

Developing stronger, far better representation of small corporations' hobbies at Union and national level

Main Governing bodies:

The commission



European Council

Political Centers




An Business in UK - Bristol & Western world Bank

Bristol & Western (B&W) is a commercial lender in britain which is a division of the lender of Ireland. Bristol & Western world has its head office in Bristol, England. It was recently a building culture known as the Bristol and West Building World. The bank's main business is mortgage lending for domestic and commercial customers.

It's Impacts created by the EU

Creating a legal construction that will improve cross-border Western european ecommerce is a key part of banking and government guidelines issued this week aimed at creating a single EU financial services market by 2005.

The Financial Services Action Plan was created by the Western european Commission in 1999 and includes a couple of measures designed to fill gaps and remove left over barriers to the integration of EU financial marketplaces.

The new rules have been given by City watchdog the Financial Services Specialist, the Bank of England and the Treasury and are intended for financial institutions, companies and consumer organizations in the united kingdom that aren't yet sufficiently acquainted with the FSAP's potential impact.

While improvement has been manufactured in inexpensive financial services, the guidelines highlight that lots of barriers still remain for the integration of retail services and especially ecommerce.

One of the key objectives in addressing this is tackling the legal doubt surrounding the status and rights of these taking part in cross-border ecommerce deals within the EU and the report highlights the importance of the Ecommerce Directive, that was implemented in the UK last year.

It states that an wide open and secure retail market you can find the necessity "to generate the legal conditions for digital commerce over a pan-European scale".

Challenges/hazards & Opportunities a UK based mostly company will face if it wishes to increase its functions in another talk about of EU


Even though UK is an associate of European Union it generally does not adjoin with the European Monetary Union (EMU), where they use a common currency in your community (Euro). UK as an EU member still handles their traditional Sterling Pounds. Therefore UK companies, when shifting their business in to another EU country they must change the money they offer with directly into Euro. (1 Euro= 0. 89 Sterling Pounds/GBP)


The EU has brought benefits in many areas, though certainly there are other areas where in fact the UK government would like to see improvements. The single European market is the world's greatest free trade area. Europe's businesses enjoy a "home" market of 490 million people, retailing goods and services without tariffs or other trade constraints, and to common safety requirements. The market has created more competitive services, increased choice and lower prices, assisting wealth and job creation.

It has lowered business costs, and opened up new opportunities, but for many it has also increased the responsibility of red tape. Such rules is one of the areas where Britain wants better performance. The Commission's 'better regulation' agenda is needs to see results, assessing the impact of new restrictions, simplifying and even cancelling existing ones.

Challenges/risks & Opportunities a UK centered company will face if it desires to increase its procedures in Sri Lanka


It should be signed up as a multi-national company, under the company action no 17 of 1982.

It should assure its products, services & features are suitable to the Sri Lankan market.

They will have to offer relatively low prices as the exchange rate difference is high (1 GBP= 165 SRL). Therefore they will have to bear deficits if they give products & services in the same condition (to provide to a cost suites Sri Lanka they have to create services with less cost perhaps) Besides maybe it's a risk investing from a developed country in a warfare prevailing developing country. Work at home opportunities may have sudden down comes.


Labor cost in Sri Lanka is rather low in comparison to UK. They can have cost benefits by starting development in Sri Lanka. Not merely labor but other resources like materials, infrastructure etc can be provided under a comparatively low cost. Since Sri Lanka a producing country they always encourage foreign investors to start out their businesses since it brings foreign currency into the country, thus they provide facilities to get foreign investment. This might entail less red tape & less guidelines & regulations.

Economic Implications for the united kingdom of accessibility into EMU

Almost all users in the European union have now switched to the new money. This has brought the solitary European market one step closer to completion. But there are still deficits in regards to European union member countries that take part in the single currency. Some of the EU states have never yet joined up with, which leaves the Economic and Monetary Union (EMU) as Europe's "Unfinished Symphony". Three countries - Denmark, Sweden and the United Kingdom - are missing even though they essentially meet up with the Maastricht conditions.

The UK must decide whether to become listed on the other associates of the European union in a economic union. This choice relies partly on the outturns for the economy outside and inside EMU. THE UNITED KINGDOM has chosen to target inflation, which can incorporate some 'price level drift', whilst the ECB emphasizes 'Price Balance' and would plan to change the drift in the purchase price level that might be caused by external shocks such as an increase in the petrol price. Membership of EMU helps stabilize inflation and the price level in the UK, but leaves result more volatile.

The central target of the UK Government is to achieve high and secure levels of progress and career and the case for joining Economic and Monetary Union, EMU, will be judged against these standards. The Government's insurance plan towards EMU is that it will join "if, in the end, a single money is successful, and the financial case is clear and unambiguous". The government has proposed five economic testing that should be attained. The five checks are:

Are business cycles and financial structures compatible so that people among others could live easily with Euro interest rates on a long lasting basis?

If problems emerge will there be sufficient flexibility to cope with them?

Would signing up for EMU create better conditions for firms making long-term decisions to invest in Britain?

What impact would entry into EMU have on the competitive position of the UK's financial services industry, particularly the City's wholesale markets?

In overview, will becoming a member of EMU promote higher growth, stableness and a sustained increase in jobs?


Going through all the analytics, explanations & comparisons the business enterprise Environment is efficiently discovered, covering all the areas of economic systems endeavors to allocate and make effective use of resources, monetary buildings, the impact of communal welfare and professional plan initiatives on organizational and the wider community in Sri Lanka, the fiscal and economic mechanisms for managing economical activity and asses their impact on business organizations and stakeholders, Market set ups & business environment in UK & their influences from europe. In the training outcome 2, according to the requirements Sri Lanka's financial system is examined & suggestions are created to choose what economic system suites Sri Lanka most. I would recommend a far retained discipline in the monetary system & the business enterprise environment in Sri Lanka to conquer its economic turmoil.

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