The Role of the Government in the US Economy

Since 1870, the US economy has been the largest economy in the world. Because the country has historically encouraged innovation and private ownership of businesses, the US economy has boomed.


The US economy is often referred to as a consumer economy. The free market allows supply and demand to determine the fate of private businesses.

The US is home to the most millionaires and billionaires of any nation in the world. Although the US economy is sometimes referred to as a capitalistic system, it is not a pure capitalistic system and never has been. For example, the US economy has always relied upon some government intervention through antitrust laws to bar monopolies from developing. The US economy is properly characterized as a mixed economy rather than a capitalistic one.

The government also intervenes with the US economy to encourage job growth and stable employment using lessons learned from the worst economic disaster in US history – the Great Depression. Economists recommend different stimulus plans to revive the US economy if needed.

The government, businesses, Federal Reserve, and agriculture are all components of the US economy. The government’s job is to support the expansion of business and maintain a stable economy. The economy has mutated over time, with the focus shifting from agriculture to industry to service and technology.

Through a democratic voting system, Americans tell leaders what changes they would like to see in the economy. For example, the environment is a major concern, so voters may choose leaders who want to curb pollution, which in effect controls the level of tolerable emissions from the business sector.


In summary, the US economy is a dynamic interplay among the people, the government, and the business and banking sector.

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