Government and the Economy

Martina and Terrance in front of the Federal Reserve Building in Washington D.C.

Take a moment to thank Terrance and Martina for their discussion about government and the economy. First, they described the four major economic indicators the government uses to determine the economy’s health. These include unemployment, inflation, gross domestic product, and exchange rates. Then they described the two major policies that the government can implement to maintain a healthy economy. The first was monetary policy, which involves decisions made by the Federal Reserve about interest rates. The second was fiscal policy, which includes the spending and taxing decisions made by Congress and approved by the President. Finally, Terrance and Martina shared some examples of government spending programs that contributed to the economic growth of the United States in the second half of the twentieth century. There was the G.I. Bill that helped veterans pay for schooling, the Interstate Highway System that helped move goods efficiently, and the three programs of President Johnson's Great Society Plan. Taken together, Medicare, Medicaid, and the Economic Opportunity Act were Johnson's "War on Poverty."