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The government is very important to the citizens of the United States. The United States has a

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The government is very important to the citizens of the United States. The United States has a federal system of government, which means that the responsibilities are shared across the levels of government. The federal government has primary responsibility for national security, economic stability, and market competition. The government can establish and enforce the roles of the game, promote competition, regulate natural monopolies, but just about the most important part of the government is providing us with a healthy economy by using the fiscal policy.
The government makes the rules for almost everything in the United States. If we did not have the government to make rules and to make everything fair then things such as contracts would …show more content…

The government, by the way of its taxing, ability to spend, and controlling money supply attempts to promote full employment, price stability, and economic growth. The government strives to gain these objectives by taxing and spending which is called the fiscal policy. There are tools of the fiscal policy and they are sorted into two broad categories. The first one is called automatic stabilizers which are revenue and spending programs in the federal budget that automatically adjust with the ups and downs of the economy to stabilize disposable income and consumption and real GDP. The second one is the discretionary fiscal policy which requires the deliberate manipulation of the government purchases, transfer payments, and taxes to promote macroeconomic goals, some of these discretionary policies are temporary.
The discretionary fiscal policy can close a contractionary gap and is also able to close an expansionary gap. An expansionary fiscal policy can close a contractionary gap by expanding government purchases, lowering net taxes, or both. Because the short run aggregate supply curve turns upward, an increase in aggregate demand raises both production and the price level in the short run. A contractionary fiscal policy can close an expansionary gap by slowing down government purchases, increasing net taxes, or both. Fiscal policy reduces aggregate demand to close an expansionary gap which

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