The ability of state and local governments to shape the economy

Question

Quizplus · Accepted Answer

State and local governments have police powers that allow them to regulate health and safety, which can indirectly shape the economy. However, their ability to directly shape the economy is limited by the Constitution, which grants the national government authority over intrastate commerce. While explicit delegation from Congress or the interstate commerce clause may also allow for some state and local economic regulation, these powers are not as broad as their police powers to regulate health and safety. Additionally, while state and local governments can offer benefits such as tax breaks to companies, their ability to do so is limited by budget constraints and competition from other states and localities.

The Ability of State and Local Governments to Shape the Economy