Essay: Role of Government in Economy

Sample Essay

The two main elements of an economy are the consumers and producers who impact the performance of economy through their decisions. The government of a country has a major role in the overall economy where it can impact the amount of inflows and outflows in the economy through various tools like interest rates, taxes, import and export policies and other regulations.

The capitalistic economic system is followed in the United States which entails free economy where private individuals and enterprises are allowed to own private property under a free market which not only determines the level of supply and demand but also paves the way for effective competition (Heilbroner and Thurow). Although the capitalistic economic system entails free market the government tries to manipulate economic conditions to ensure stable overall growth, affordable prices and decrease levels of unemployment.

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