The Role Of Government And Economy

While consumers and producers make most decisions that shape the economy, government activities have a powerful effect on the U.S. economy, at least four areas.

Perhaps most importantly leadership of the federal government controls overall economic activity, attempting to maintain stable growth, high employment and price stability. By adjusting spending and tax rates (fiscal policy) or managing the money supply and controlling the use of credit (monetary policy), we can slow or accelerate the economic growth rate - in the process, influencing the level of prices and employment (Adam 2005).

For many years after the Great Depression of ...