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

U.S. President Joe Biden speaks during a cabinet meeting at the White House in Washington, D.C., on Oct. 2, 2023.
Bidenomics: How Joe Biden’s Policies Are Shaping the U.S. Economy
Session of U.S. House of Representatives
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
A Peterson Foundation billboard displaying the national debt is pictured on 18th Street in downtown Washington, D.C., on Feb. 8, 2022.
U.S. National Debt by Year
The History of Labor Day
Protesters for and against affirmative action demonstrate on Capitol Hill on June 29, 2023 in Washington, D.C.
Supreme Court 2023 Rulings on Affirmative Action Explained
President Joe Biden Signing Paperwork
U.S. Debt by President: Dollar and Percentage
Gavel and law book in front of lawyer
Rulemaking for Federal Agencies
Hand on a Screen with Market Chart
Digital Markets Act (DMA): How the EU Law Will Work
Line Outside Unemployment Office
What ‘Slowcession’ Means for Economic Growth
Pregnant Worker on Assembly Line
Pregnant Workers Fairness Act: Protections, Legal Remedies, Examples
Federal Pandemic Unemployment Compensation
Federal Pandemic Unemployment Programs: How They Worked
U.S. soldiers board an Army Chinook
National Defense Authorization Act for FY 2023
Christian Smalls, founder of the Amazon Labor Union (ALU), second left, and labor organizers celebrate outside the National Labor Relations Board offices in the Brooklyn borough of New York, U.S., on Friday, April 1, 2022.
National Labor Relations Board (NLRB) Definition
Official seal of the Office of Management and Budget
Office of Management and Budget (OMB)
Rishi Sunak speaks during final Tory leadership campaigning
Who Is Rishi Sunak?
Employee Plans Compliance Resolution System (EPCRS): What It Is, How to Use It
Bankers Who Took the Bailout
Bank Term Funding Program: Definition, Why It Was Created
Federal Emergency Management Agency (FEMA) representative with resident affected by Hurricane Sandy in Queens, N.Y., in January 2013
Federal Emergency Management Agency (FEMA): How It Works, What It Provides
President Ronald Reagan with U.K. Prime Minister Margaret Thatcher, 1981.
5 Reasons Why Supply-Side Economics Does Not Work
Overhead shot of shipping containers in a shipyard
U.S. Export Restrictions: What Are They, and How Do They Work?
Three people sitting around a table with papers, laptop, etc.
Sectoral Bargaining: What It Is, How It Works, Pro and Con Debate
Indigenous Navajo Woman Teacher at the Front of Her Classroom
Largest Indigenous Groups in the U.S.
An agricultural producer rides a tractor in front of solar panels.
What Is the Rural Energy for America Program?
Farmer riding tractor
Financial Help for Climate-Friendly Farmers, Ranchers
Robotic arm welding and installing component at semiconductor circuit board on workbench
What Is the CHIPS and Science Act of 2022?
Inflation Reduction Act of 2022
Inflation Reduction Act of 2022
Person about to sign a document
What Is a Specific Performance Clause?
same-sex marriage supporter waves a pride flag
Firsts for American LGBTQ+ People
Gas shortage sign
1973 Energy Crisis: Causes and Effects
North Atlantic Treaty Organization (NATO)
North Atlantic Treaty Organization (NATO): Meaning and Members
U.S. Trade Representative (USTR)
U.S. Trade Representative (USTR)
Housing Trust Fund
Housing Trust Fund (HTF)
Margaret Thatcher
Margaret Thatcher
Outside observers are wondering whether Russia’s downward economic spiral can shake Vladimir Putin’s hold on power.
Oligarch: What It is, How it Works, FAQs
A child care center with an adult and kids seated on the floor and involved in projects.
Community Development Block Grants (CDBG) Overview
Juneteenth Memorial Monument at the George Washington Carver Museum in Austin, Texas
Juneteenth: What It is, History, Other Freedom Days
The US Federal Trade Commission (FTC) bu
FTC Takes On Pandemic Predators
Emancipation Day
Emancipation Day: Meaning, History, Versus Juneteenth
Woman demonstrating for equal pay in Cincinnati
Equal Pay Act of 1963: Overview, Benefits, Criticisms, FAQ
Older woman using a flip phone.
Lifeline Program for Low-Income Consumers
Wallet showing social security card
Social Insurance: What it is, How it Works
Road Sign Against Bridge and Sky in City
Infrastructure Investment and Jobs Act: Definition and Summary
Bank Merger Review Modernization Act
Bank Merger Review Modernization Act
Technology Modernization Fund (TMF)
Technology Modernization Fund (TMF)
Emissions from the smokestack of a natural gas and coal power plant that are harmful to the atmosphere
Biden's Proposals to Fight Emergencies and Climate Change
Low-income senior housing
Community Land Trust: Meaning, Pros and Cons, Example
A person looks at computer screens.
Section 230 Protection: Meaning, Criticism, Purpose
SNAP Benefits by State
Alexander Hamilton
Who Was Alexander Hamilton?
Medical bills, stethoscope, pen
No Surprises Act Definition, Improved Healthcare Transparency
Paycheck Fairness Act: A piece of legislation that aims to eliminate wage discrimination based on sex.
Paycheck Fairness Act: Meaning, Pros and Cons
A renter sits on a couch texting, surrounded by open cardboard boxes in his new apartment
Rent Stabilization: What it is, How it Works, Examples
Vice President Kamala Harris speaks at the Chavis community center
Milestones in Gender Equality
A white woman and her daughter shopping with EBT coupons, also known as food stamps, represent the largest racial group that benefits from SNAP in the U.S.
Supplemental Nutrition Assistance Program (SNAP): Overview
Surface Transportation Board (STB): A federal agency that regulates financial aspects of various modes of surface transportation.
Surface Transportation Board (STB): What It is, History
Contract Buyers League
The Contract Buyers League: How It Battled Housing Discrimination
A cargo ship in the water carrying containers with a smaller tug boat on the side.
Federal Maritime Commission (FMC): Meaning, History, Key Statutes
Tired new mother holding her baby
Women, Infants, and Children Nutrition Program (WIC)
Suburban American street with three houses of various revival stylings close together and close to the sidewalk
Single-Family Zoning: Definition, History, and Role in Racial Segretation