HGov: Economic Functions of Government

unclesamAlthough private enterprise is the main force in the American economic system, the federal government plays a significant role through its policies to regulate, promote, and stimulate the economy.

Regulatory policy is designed to achieve efficiency and equity, which require the government to intervene, for example, to maintain competitive trade practices, an efficiency goal, and to protect vulnerable parties in economic transactions, an equity goal. Many of the regulatory decisions of the federal government, particularly those of older agencies, such as the Food and Drug Administration, are made largely in the context of group politics. Business lobbies have an especially strong influence on the regulatory policies that affect them. In general, newer regulatory agencies, such as the Environmental Protection Agency, have policy responsibilities that are broader in scope and apply to a larger number of firms than those of the older agencies. As a result, the policy decisions of the newer agencies are more often made in the context of party politics. Republican administrations are less vigorous in their regulation of business than are Democratic administrations.

1) Read Chapter 14 pp.445-474
2) Read Chapter 15 pp.481-511



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