Final answer:
Economic policy in the U.S. is aimed at balancing several goals - from economic growth to equity - within the free-enterprise system. Government involvement is key in regulating the marketplace to protect consumers and ensure equality while promoting economic stability. Analysis of economic philosophies and their impacts on the system is also crucial for policy formulation.
Step-by-step explanation:
The role of economic policy in the United States system of government involves balancing the goals of the U.S. economy, which include economic growth, stability, full employment, freedom, security, equity, and efficiency. The government attempts to achieve these goals while protecting the free-enterprise system. This system is characterized by individual freedoms for consumers and producers, a variety of goods, responsive prices, investment opportunities, and wealth creation.
To illustrate, one goal is economic growth, which the government supports through infrastructure spending, encouraging investment, and maintaining a favorable trade balance. Stability is supported by managing inflation and controlling the money supply. Full employment is sought through policies that incentivize job creation and provide training programs.
When creating policies, the government must consider their role in supporting individual freedom while also ensuring market equity and security. This involves regulations to protect against unfair practices, without overly restricting business operations. Efficiency in the market is often addressed through antitrust laws and supporting innovation and competition.
Government interference in the marketplace is justified to create equity and protect consumers, to provide public goods, to correct for market failures, and to promote macroeconomic stability. For instance, to promote equity, initiatives like progressive taxation and social welfare programs are implemented.
In evaluating policies, it's important to analyze contributions of economic thinkers such as Adam Smith, who advocated for the free market, and Keynes, who supported government intervention during economic downturns. These philosophies help fine-tune the U.S free enterprise system and shape contemporary economic policies.