Economic Policy: Private Businesses and Government (Research Paper Sample)

Name:
Professor:
Course:
Date:
Economic Policy
The United States global economic goals are numerous. Notably, the main ones are centered on achieving desirable societal outcomes, namely prosperity, growth in jobs, environment protection, increase in home ownership, innovation and science, as well as entrepreneurialism among others (McKinney (a) 2). To measure these goals, the state uses some performance indicators, such as inflation, growth in the economy; debts affiliated elements, and changes in educational sector. Apart from that, these goals are evaluated by institutions that are responsible for the economic policy, such as the Federal Reserve, Treasury, and the Office of Management and Budget among others. Noteworthy, the evaluation is made on an annual basis.
The United States is not a free market economy since it is characterized by government interference and regulations. The free market economy usually exists without any interference in the private businesses made by the government, which is not the case in the United States. The US authorities affect the economic affairs and influence the public sector (Bostaph 207). The interference of the government in private and public sectors is made through numerous laws and regulations. While the Executive power and Congress make these policies and decisions, the courts, states, and municipalities ensure that they are properly implemented.
The benefits of government interference are centered on the main objectives of the laws and regulations. Essentially, through these laws and policies, the quality of products and services is ensured (McKinney (b) 12). Government also prevents malpractices made by the organizations such as the irregular alteration of the market prices. However, such interferences have its downsides. Such include the protocols that affect the work of private sector. Abiding by these regulations is also time-consuming and expensive. Considering an example of “the law of unintended consequences,” it is when an organization decides to introduce new technology to increase the efficiency of operation. However, due to the resistance to change, a company records more losses and poor quality goods and services.
Fiscal policy is defined as the manner in which the government alters the tax rates and spending levels aimed at influencing the economy of the nation. Such policy shapes the economy in a positive way through monitoring the public spending while reducing the tax levels, which mitigate inflation.
Monetary policy is described as the management of liquidity made by the central bank, which is centered on creating economic growth (McKinney (b) 6). Liquidity represents the amount of money in supply, such as loans, mortgages, and bonds. The positive effect of this policy on an economy is based on managing inflation while reducing unemployment.
Keynesian spending is described as the method that the government use to fill the demand gap if the economy is negatively affected. However, after stabilization, the authorities increase the taxes to cater for the deficit. The supporters of this approach state that it is the best tool that helps the economy recover after the recession (McKinney, (b) 7). Critics, on the other hand, suggest that the multiplier cannot materialize as the government can waste ...