Government Intervention in Market Operations Essay

Government Intervention in Market Operations - Essay Example In addition, the firm may create differences in employee skills like the education level or training received. Products may be differentiated through the distribution of the products. This could occur through internet shopping like the Amazon.com that is a modern online store and differentiates itself from the traditional stores. This type of market structure is realistic since there is product differentiation. Firms make independent decisions in regards to prices and production costs (Bordo & Humpage, 2006). In addition, since there are no major barriers to market entry or exit, people are free to enter or leave the market. Moreover, firms make independent decisions in regards to price and the output as well as the production costs. The U.S government has implemented the fiscal policy that helps control the level of demand for different products as well as the economic demand pattern. It generally describes the impacts on the aggregate economy and the overall spending and taxation. Taxes are the major source of revenue by the government. The government also provides subsidies and contracts to public works as well as the salaries of the employees. The taxation and spending are sources for driving demand and increase the growth of the economy. Fiscal policy entails the government making a decision about the goods and services it buys, the collection of taxes and distribution of transfer payments. The main goal of the fiscal policy is to observe and maintain a high economic growth as well as ensure there is full employment (Fatum & Hutchison, 2003). Moreover, it helps the U.S government make decisions on whether it will spend more or less than it gains. There are two types of Fiscal policy, the expansionary, and th e contractionary policy. The main objective of the expansionary policy is to create growth and stimulate the economy. In addition, the government either reduces taxes or spends more.  Ã‚