Final answer:
The federal government is better equipped to handle policy issues with broad implications like national security, immigration, and setting minimum federal standards. It solves collective action problems and ensures uniform public services and funding for programs with positive externalities.
Step-by-step explanation:
The federal government is typically more equipped than state and local governments to handle policy issues that have broad, national implications and where uniformity across states is essential. Examples of such areas include national security, immigration, and maintaining minimum federal standards like the minimum wage and air quality standards. The federal government can address the problem of collective action by requiring states to meet certain regulations, thus avoiding a 'race to the bottom' where individual states might be tempted to lower standards to attract business. Moreover, federal policies can ensure a degree of uniformity in public services and help maintain programs that generate positive externalities, such as environmental regulations, which might otherwise be underfunded by individual states.