Question

Explain the importance of government in promoting economic programs in a society. Explain the importance of government in promoting economic programs in asociety. What functions should it provide? How well did it do prior to the Great Depression of 2008-2010? During the recession? What is credible today in these areas?

Answer 1

State intervention has been used in advanced countries to ensure economic stability and maximum resource utilization. In underdeveloped economies, which are struggling hard to get rid of poverty and achieve higher living standards, state action is all the more inevitable. There is a circular system of forces in an underdeveloped economy which tend to act and respond to each other in a way that keeps a poor country in a stationary state of underdevelopment equilibrium. Only a systematic government planning of the economic development cycle will crack the vicious circle of underdeveloped equilibrium. In an underdeveloped country, a high rate of investment and output growth can not be achieved simply because of the functioning of market forces. These forces ' operation is hampered by the existence of economic rigidities and structural imbalances. Economic development is not an automatic or spontaneous affair.

The development process in an underdeveloped country in the initial phase is primarily held up by the lack of basic social and economic overheads such as universities, educational institutions and research institutes, hospitals and railways, highways, ports, harbors and bridges, etc. It needs very large investments to provide them. These investments will lead to the creation of external economies, which in turn will provide opportunities for the production of both industry and agriculture in private enterprises.

Lowering the target interest rate, of course, was not the only thing that the Fed and the U.S. government did to combat the Great Recession and reduce its economic impact. President George W. Bush signed into law in February 2008 the so-called Economic Stimulus Act. The bill offered rebates to homeowners ($600 to $1,200), which they were encouraged to spend; reduced taxes; and expanded credit limits for federal home loan programs Ideally this last component was intended to generate new home purchases and boost the economy.