The correct answer is Sanctions and fines are applied.
If regulatory policies for a business are violated, sanction and fines are being applied.
It is through regulatory policy where econom can be affected by government by a way of limiting what is being done in the market place.
When a government puts excess regulation it may lead to overregulation and it is this overregulation which creates inefficiency in a business.
The purpose of government to over regulate is because of promoting justice or increasing equity.