Government & Policy

Governments can have an enormous impact on the economy. Learn how the government affects taxes, trade, markets, interest rates, and more through policy, regulation, and legislation.

Frequently Asked Questions
  • How does the government control inflation?

    The most common way governments control inflation is by raising or lowering interest rates. Put simply, high interest rates counter inflation by reducing the money supply, and low interest rates promote inflation by increasing the money supply. In the U.S., the Federal Reserve indirectly controls interest rates through the federal funds rate, the interest rate banks charge each other for loans made overnight.

  • What is the difference between communism and socialism?

    Communism and socialism both advocate for a more equitable distribution of wealth than that achieved under capitalism, but they differ in their means and the extremity of their vision. A basic premise of communism is that a communist order is achieved through a revolution in which the working class (proletariat) overthrows the ruling class (bourgeoisie). Socialism insists on working within existing systems to implement reform. Communism also advocates the dissolution of all private property so that all property is owned by the state, which distributes resources evenly between citizens. Under socialism, the means of accumulating wealth (industry and commerce) are collectively-owned and managed by the government, but property like homes and personal possessions can remain privately-owned.

  • How much does the U.S. spend on healthcare?

    According to Centers for Medicare & Medicaid Services, U.S. healthcare spending is expected to reach $6.2 trillion, or 20% of GDP, by 2028. In 2020, spending per person was $12,530, the highest of any developed country. Norway, which ranked second in terms of healthcare costs, spent $6,748 per person, almost half of U.S. expenditures.

  • What is the difference between monetary policy and fiscal policy?

    Monetary policy refers to the actions taken by a central bank to achieve economic goals like low unemployment and stable prices. Monetary policy is often executed through the increase or decrease of the money supply. Fiscal policy refers to the government’s tax and spending plans. Fiscal policy is administered by the legislative and executive branches of government.

Key Terms

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U.S. Unemployment Rate by President
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U.S. Gross Domestic Product (GDP) Growth by President
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U.S. Inflation Rate by President: From Eisenhower to Biden
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U.S. Government Uses for Artificial Intelligence
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Bidenomics: How Joe Biden’s Policies Are Shaping the U.S. Economy
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14th Amendment and Its Role in the Debt Ceiling Debate
Gilded Age: A time period from the 1800s to the 1900s in which there was economic growth for the wealthy and extreme poverty for the working classes.
The Gilded Age Explained: An Era of Wealth and Inequality
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U.S. National Debt by Year
The History of Labor Day
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Supreme Court 2023 Rulings on Affirmative Action Explained
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U.S. Debt by President: Dollar and Percentage
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Rulemaking for Federal Agencies
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Digital Markets Act (DMA): How the EU Law Will Work
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What ‘Slowcession’ Means for Economic Growth
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Pregnant Workers Fairness Act: Protections, Legal Remedies, Examples
Federal Pandemic Unemployment Compensation
Federal Pandemic Unemployment Programs: How They Worked
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National Defense Authorization Act for FY 2023
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National Labor Relations Board (NLRB): Definition, Duties, and Activities
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Office of Management and Budget (OMB)
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Who Is Rishi Sunak?
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Employee Plans Compliance Resolution System (EPCRS): What It Is, How to Use It
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American Rescue Plan (Biden’s $1.9 Trillion Stimulus Package)
Bankers Who Took the Bailout
Bank Term Funding Program: Definition, Why It Was Created
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Federal Emergency Management Agency (FEMA): How It Works, What It Provides
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U.S. Export Restrictions: What Are They, and How Do They Work?
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Sectoral Bargaining: What It Is, How It Works, Pro and Con Debate
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Largest Indigenous Groups in the U.S.
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Financial Help for Climate-Friendly Farmers, Ranchers
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What Is the CHIPS and Science Act of 2022?
Inflation Reduction Act of 2022
Inflation Reduction Act of 2022
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What Is a Specific Performance Clause?
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Firsts for American LGBTQ+ People
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1973 Energy Crisis: Causes and Effects
North Atlantic Treaty Organization (NATO)
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U.S. Trade Representative (USTR)
U.S. Trade Representative (USTR)
Housing Trust Fund
Housing Trust Fund (HTF)
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Community Development Block Grants (CDBG) Overview
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Equal Pay Act of 1963: Overview, Benefits, Criticisms, FAQ
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Lifeline Program for Low-Income Consumers
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Social Insurance: What it is, How it Works
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Infrastructure Investment and Jobs Act: Definition and Summary
Bank Merger Review Modernization Act
Bank Merger Review Modernization Act Definition
Technology Modernization Fund (TMF)
Technology Modernization Fund (TMF)
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Biden's Proposals to Fight Emergencies and Climate Change
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Section 230 Protection: Meaning, Criticism, Purpose
SNAP
SNAP Benefits by State
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Who Was Alexander Hamilton?
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Milestones in Gender Equality