GE273 Microeconomics
Project: Part 1

In the following paragraphs I am going to try and give a brief overview of the United States economy and what role the federal government plays in the economy. I will talk about what a mixed economy is and the federal government’s involvement in the local economy. I hope that you get a better understanding of how our economy works and how the government impacts our economy. Probably the two most important roles the federal government plays in our economy are stabilization and growth. “Perhaps most importantly, the federal government guides the overall pace of economic activity, attempting to maintain steady growth, high levels of employment, and price stability. By adjusting spending and tax rates (fiscal policy) or managing the money supply and controlling the use of credit (monetary policy), it can slow down or speed up the economy's rate of growth -- in the process, affecting the level of prices and employment.” (Beggs, 2012) In the United States we have a mixed market system. A mixed economy is an economic system in which both the state and private sector direct the economy. Most mixed economies can be described as market economies with strong regulatory oversight and a variety of government aspects. Americans believe that supply and demand is what drives the cost of products and services. The cost of products tells companies what to manufacture; therefore, the price of products rise because there is an increasing demand for that product; companies take notice and start making more of that product. Americans believe there is a limit to free enterprise and most Americans believe that public enterprise is more effective than private enterprise in some situations such as the road system, national defense and our justice system. Government steps in with the economy to correct situations where the price system does