Question

In: Economics

What is the relationship between types of guarantees a government provides and the type of economic...

  1. What is the relationship between types of guarantees a government provides and the type of economic system in the society? And what is the relationship between government and economics?

Solutions

Expert Solution

The relationship between the govt and the economy of a nation is directly correlated. The govt arrogates the purpose of policymaker that undeviatingly and discursively influences the economy of a nation. For example, the Fed. Reserve, a state entity, sets interest rates and ensures major financial determinations for the US.

The govt also adopts a policy to heighten or decrease the economy. Furthermore, political philosophy and leadership influence the prosperity through tax rates.

To address guarantees from the govt, we can apply entitlement programs as an illustration. The US welfare policy is a guarantee supported by the govt to back struggling citizens. The more of the guarantees the govt makes, the more socialized the economy grows. Public education and roads are 2 guarantees the govt grants, for example. If the govt didn't afford such things, the private trade would satisfy the void. Nevertheless, this demands govt regulation to make sure of fair play. This is the principal reason why the govt and the economy relationship is necessary.


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