Economics studies how society allocates its scarce productive resources (land, labor, capital, and entrepreneurial talent)

Role of U.S. Government in the Economy

Question I

Traditional Economic System

A traditional economic system concentrates on essential commodities closely connected to society's ideals, conventions, and customs ("13.2 Types of Economic Systems", 2021). It is highly reliant on people, with little specialization or division of tasks.

Command Economic System

A command economic system is distinguished by a dominant centralized entity, often the government, which controls a substantial portion of all economic activity. Moreover, in communist nations, this form of economy is most prevalent ("13.2 Types of Economic Systems", 2021).

Market Economic System

A market economic system is based on free markets and excludes government intervention from the economy. The government has no authority over any resources or other critical economic sectors under this system ("13.2 Types of Economic Systems", 2021). However, individuals and supply and demand laws control the whole economy.

Mixed Economic System

Any combination of a market and a command economic structure is referred to as a mixed economy. Even though there is no definition of a Mixed Economic System, the phrase is most commonly used to characterize market economies in specific domains, such as public goods or services, with significant regulatory monitoring and government oversight.

Question 2

America's economy is mixed, and it functions according to an economic structure that has both capitalist and socialist attributes. A mixed economic system safeguards a certain degree of private property and allows governments to participate in economic activity to accomplish social objectives and public welfare ("How the U.S. Economy Works", 2021). As a result, a mixed economic system combines aspects of free markets with government-planned economic restrictions.

Question 3

The involvement of the U.S. government in the economy may be divided into two fundamental functions: fostering economic stability and growth and regulating and managing the economy. Fiscal and monetary policy are its instruments for fostering sustainability and growth (Pettinger, 2021). The federal government governs and regulates the economy through various legislation impacting economic activities, and regulations upholding private property rights to statutes encouraging commercial competitiveness are among them.

Question 4

The economic function of the U.S government is essential to the U.S. economy since it plays a significant role in deterring monopolies from emerging. Generally, if there is a significant level of competition in any sector, customers and the economy as a whole will gain. Companies must adequately prize their items and provide outstanding quality commodities for customers to compete with one another ("How the U.S. Economy Works", 2021). On the other hand, if a firm has a monopoly, it inherently concentrates on ensuring its profits irrespective of customer concerns or economic efficiency. If several firms seek to consolidate, but the resultant entity threatens to become a monopoly, the government can step in to thwart the merger. Consequently, since it is a critical stakeholder in the economy, I favor larger government involvement in the economy.