(GED Social Studies/ECONOMICS; Lesson 3)-The Economy And The U.S. Government

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The United States government has a considerable impact in the economy of the nation. Through taxes, employment and borrowing and spending money, this can affect the economy.  The executive and the legislative branch of government are involved in setting U.S. government budget. The budget might either be surplus or deficit. But it all depends on how it been used by the government.

The federal government creates good conditions for free market in the U.S. The standards must be fair and friendly for business to operate well by making laws that helps businesses grow. Some roles of the federal government are as follows:

  • The federal government creates a stable currency and operates the U.S. mint-which make coins and print paper money.
  • The Federal Reserve System controls the total money used for borrowing and leading in the private banking. They also partially control interest rate.
  • The federal deposit insurance corporation (FDIC) insures the money in individual account.
  • The federal government creates welfare like infrastructure, distributing wealth according to what people live on and so on.
  • The food and drug administration (FDI) are responsible for making sure that food products, drugs and cosmetics are safe for use.
  • Federal trade commission (FTC) makes sure those products that are advertised are true and complete.


  1. What kind of impact do the U.S governments have on the economy? A. Considerably B. Severe C. Partial D. Eternal

Ans= A