Economic instruments are tools used by governments and organizations to influence economic behavior and achieve specific policy goals. These instruments can include taxes, subsidies, and tradable permits, which aim to encourage or discourage certain activities. For example, a carbon tax may be implemented to reduce greenhouse gas emissions by making polluting activities more expensive. These instruments work by creating financial incentives or disincentives that affect how individuals and businesses make decisions. By adjusting the costs associated with certain actions, such as using fossil fuels or conserving energy, economic instruments can help promote sustainable practices and drive economic growth while addressing social and environmental issues.