Chapter 16, Problem 21AA

To determine

To evaluate in favor or less in government involvement in the economy.

Explanation of Solution

The U.S. economy has multiple positions within government. The government invests and makes money, buys goods and services, and hires people, as do other businesses. Federal, stat , and local governments directly collect funds through taxes and fees. Often they borrow money from the public through the selling of shares, such as bonds.

A bond is an investment in which people loan money and interest rates to the government for a fixed period. Governments often disburse money through contracts with corporations or through public-benefit social services.

Ultimately, the US economy is a manipulator of the federal government. This affects macroeconomic conditions through fiscal policy and financial policy, such as inflation and unemployment. Fiscal policy revolves around taxes and expenditure. Monetary policy involves the amount of money in circulation and the functioning of the central banking system in the country.

Economics Concept Introduction

Introduction: Governments are responsible for providing infrastructure that people, such as military defence, fire and police forces, highways, healthcare, social care, and environmental protection, cannot adequately provide for themselves.