Influence of federal government on the american economy

The United State of America GDP is among the highest in the world with also the highest growth rate which is characterized by high employment, development and research rate. The main economic concern is about the national debt (fiscal debt), entitlement liabilities, external debt, low rate of savings, consumer debt and the economic deficit which the federal government controls by setting policies and guidelines and implementing. Freedom in Economic decision making is on of the key features in the economy of America and this is favored by low degree of taxation, government control and regulation.

The federal government is responsible for the growth of the economy and the rate of economy. This leads to use of the fiscal policies and the monetary policies. The fiscal policies includes the controlling the rate of taxes and adjusting the spending whereas the monetary policies includes the control of the money supply and demand, control of the use of credit. The federal government applies the monetary and fiscal tools in meeting its objectives and their impact is reflected in the changes in the prices levels of production and the employment rates.

The fiscal policy is the money the federal government uses to control the economic activity, income distribution and resource allocation. The fiscal policy is used to determine the aggregate demand of the economy that is further reflected by the changes in the employments rates, prices and economic growth. In its effort to regulate the economy, the federal government of the United States controls the private enterprises through setting the prices indirectly or directly.

The anti- trust laws have also been established that aid proper operations of the market forces therefore limiting the essence of direct regulation REFERENCES U. S. Fiscal Policies and Priorities for Long-Run Sustainabilies, retrieved on 17th, October, 2007, available at www. imf. org/external/Pubs/NFT/Op/227/ The Daily Bruin – Threads of influence, retrieved on 17th, October, 2007, www. dailybruin. ucla. edu/news/2004/jan/27/threads-of-influence0/