ACT 23 The US Govenment and the Economy Essay Example | Topics and Well Written Essays - 500 words

affect 23 The US Govenment and the Economy - Essay ExampleAccording to the model, C indicates consumption by consumers, X and M represent exports and imports respectively. The I and G represent organization investment and government spending respectively. It is impossible to compute the GDP without considering the governments investment in the open sector and its spending. Governments investments take the form of gross capital formation and final consumption expenditure. For example, government investment in gross capital formation entails investing on projects that ought to derive future benefits to the unexclusive such as infrastructure. On the other hand, investments on final consumption entail purchasing goods and services that ought to satisfy the publics immediate needs.The governments spending forms the third component of the GDP model. Spending in this case refers to the act of obtaining and releasing money to the economy. Such a phenomenon is referred to as the fiscal p olicy. The government controls the fiscal system through treasury bonds and bills. The government sells the treasury bonds and bills to the public to reduce the amount of money in the economy. On the other hand, the government may buy the treasury bonds and bills from the public to increase the amount of property in the economy. As such, the government controls the flow of money by trading on the treasury bonds and bills.The governments role in the economy should not cease. In fact, its role ought to increase. This is possible through the monetary policy. The government has control over the flow of funds in the economy. In addition, the flow of funds in the economy dictates economic growth. However, such flow ought to be kept at a manageable level to avoid inflation or slow economic growth in the case of excessive funds and a deficit respectively. The government ought to apply stringent measures to control how commercial banks implement the monetary policy. The public ought to a ccess funds at a