Turn on the news any night, and one of the most common things that you'll hear politicians talking about is what they believe to be the proper role of government. How much should government intervene, if at all, in the economy? Should the government leave the economy to businesses and consumers?

Regardless of what side of the political aisle you sit on, or if you choose not to pick a side, it's a given that the federal government has some role to play in the economic life of our country. Its activities fall into one of four categories:

• Stabilizing the economy
• Creating a budget to run the country
• Protecting property rights and enforcing contracts
• Regulating businesses

Stabilizing the Economy It is very important for our economy to stay relatively stable. A stable economy promotes economic growth and encourages investors to feel confident about spending their money in America. Open the presentation to learn more about how the government tries to keep the economy stable. View a printable version of this interactivity.

Government Support for Pure Research

The government also provides ongoing economic support by promoting pure research through grants and programs. This benefits scientists by giving them the money to perform research in order to push the boundaries of scientific understanding. The public benefits through innovations in a variety of fields. When it comes to pure research, people often think of health sciences like the Human Genome Project, which is funded by the National Institutes of Health (NIH). Government funding has promoted research in all types of fields. The Internet was developed as a result of funds from the U.S. Defense Advanced Research Projects Agency (DARPA) and the U.S. National Science Foundation (NSF). Government support for research can be an important stimulus for scientific achievement as well as a way to provide economic support.

Keynesian Economics

Not all economists agreed with Adam Smith's ideas about how the invisible hand of the market could correct all economic problems. One such economist, John Maynard Keynes, advocated that governments use fiscal and monetary tools to stimulate demand and get the economy going again during downturns in the business cycle. As we just saw in the Stabilizing the Economy presentation, his ideas have become part of mainstream economic thought, although that does not mean that all economists agree with them.

When you read the news, you can see evidence of Keynes' influence when people promote stimulus programs as a means to help make the economy grow during tough economic times. Stimulus programs usually rely on government borrowing. The idea is that as the economy grows, borrowing decreases and tax revenues go up as businesses grow, and these revenues go to pay back the debt. As we've seen, this is not always the case.

	The Federal Budget Process Every year, the federal government creates a budget, or a spending plan, for how it will use its revenues. How much the government spends, where it gets its money, and on what programs it spends the money are very important issues that can affect your daily lfe, and the lives of millions. Open the presentation to learn more how the budget process works. View a printable version of this interactivity.
	Protecting Property Rights and Enforcing Contracts A fair and effective legal system is crucial to a stable government and economy. The government is responsible for enforcing private contracts, defining and protecting private property rights, and establishing and enforcing laws to govern our free enterprise system. Without property rights there would be little incentive to invest. People invest in what they own because they expect to earn a return on that investment. Watch the presentation to learn more about how the government enforces personal property rights and contracts. View a printable version of this interactivity.
	Government Regulation Who or what makes sure that you are protected from unfair competition or harmful products? The government does. Government regulation is the act of controlling business behavior through a set of rules or laws. Open the presentation to learn more about what things the government regulates and how it does this. View a printable version of this interactivity.

Market Failures

How do government regulations impact market faulures? In this interactivity, you will discover what a market failure is, as well as its four main sources. Click the player button to begin.

View a printable version of this interactivity.