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Lauren Scott
Period 1
The Role of Government in a Capitalist Economy
The government has many roles in a capitalist economy. The three basic jobs of the government are to stimulate growth, regulate business, and provide protection. In order to obtain these goals the government implements various policies. ...
In order to stimulate the economy the government usually utilizes one of two policies, fiscal or monetary. Keynes believed that only the government was able to step in and offset changes in investment sector spending. This would occur in the form of fiscal policy in which the government applies spending and/or taxation policies to stimulate economic activity. The government can take a direct role and use its own spending to offset the decrease in business spending. On the other hand, the government can take an indirect role by lowering taxes and enacting other procedures to encourage consumers to spend more. Increases in government spending, such as public works projects, transfer payments, and tax reductions, can be used to increase aggregate demand. The ideal situation that Keynes saw was for the government to increase spending to offset declines in business spending, and to decrease spending whenever business spending recovered. ... Monetary policy places the most importance on the role of money and its growth.
Approximate Word count = 999
Approximate Pages = 4
(250 words per page double spaced)
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