Question

To what extent should the government influence the economy of a democracy such as the United States? Support your position with concepts from the readings.

Answer 1

Government controls the Fiscal policy of the democratic nation which holds a significant impact upon the economic activity as well as the economic environment of the nation. Government controls the taxation which can be an effective measure to boost consumption or reduce inflation they can spur aggregate demand as well as increase savings, they controls the government spending and which sector to infuse with capital that helps increasing economic activity as well as support the deteriorating sector.

Government through progressive taxation helps achieve the objective of equality, income distribution and social justice. Through Trade agreements government control political as well as economic activity alike. Government through cheap supply of essentials control inflation, unemployment through spending.