Government policies can have a profound on economies. Price ceilings that set the maximum amount that a good or service can be sold for or price floors that mandate the minimum a service or good can be sold for are just a few of the items that a government can institute that will have both positive and negative effects on the economy. Education for the citizens of a nation can make a nation more competitive and this is a good reason for a nation to offer assistance towards secondary education. Free trade between the borders of a nation can help subsidize the needs of a nation by trading goods that are plentiful and obtaining goods it needs.
A country can trade for goods and services with other countries which can help a nation’s economy flourish. Trading abroad can help maintain competition and make goods and services available to each trading nation and help keep prices competitive. Trading with other countries can be difficult as they may have different laws governing different issues. One manner that the US Government has helped with this is the negotiation for the Transatlantic Trade and Investment Partnership (TTIP). Financial services under a TTIP (2013) stated that in July 2013, officials from the European Commission and US government met in Washington to launch negotiations toward a Transatlantic Trade and Investment Partnership (TTIP) -- the world's largest free trade area (p.49). Another example of a free trade organization is the World Trade Organization (WTO). Lowering the boundries between two countries is a great thing for each country and can help each benefit from each’s specialties. What is better that this is to have nearly 200 counties lower their borders and open for free trade on a much grander scale. This is exactly what the WTO did when it was established in 1995. Mankiw (2012) stated that as of 2009, 153 countries have joined the organization, accounting for more than 97 percent of world trade (p. 187). One aspect this can enhance the quality of life for a nation is being able to bargain for items that may not be available internally. If Great Britain found a cure for a rare disease then having an open trade agreement with them will make it available for the US as well.
Government and Taxes
Government tax cuts are used to help stimulate the economy. The government can issue relief for taxpayers by reducing the amount of taxes it collects. This action by the government is done so the citizens will have more money and hopes that it will be spent, putting the money back into the economy. The American Recovery and Reinvestment Act (ARRA), was designed to help the economy recover from the 2008 financial crisis and subsequent recession. Amaedo (2013) stated that “Cut taxes by $400 for individuals and $800 for families through reduction of withholding. This caused confusion, since many people expected checks like the Bush Tax Cuts.” The main difference between these two tax cut policies were;...