Government policy is a broad term that encompasses laws, regulations, and court decisions made by federal, state, and local governments. These policies influence our daily lives and impact every aspect of society. Governments make policy through a complex process that involves varying factors such as social and economic conditions, prevailing political values, and publics mood. Modern policy makers work to collaborate with a variety of stakeholders including interest groups, lobbying firms, non-profit organizations, and varied constituency groups to gather insights and develop solutions to specific challenges facing society.

There are 2 subsections to direct government action involving money; these include buying/contracting and subsidizing. The buying/contracting subsection also defines the means of influencing behaviours; either directly (Oblige), by making an alternative more available through subsidies, or indirectly (Regulate) by mandating certain behaviours or limiting others.

The influencing of behaviours is done through an array of policy instruments such as incentives, education, awareness campaigns, regulation, and enforcement. Other indirect policy instruments used to influence behaviours are economic benefits such as tax breaks, and the use of reputational capital, a form of soft power that allows governments to reward desirable behaviours.

Distribution policies are important for ensuring that resources and opportunities are distributed fairly to different segments of society; this may include subsidizing housing costs, granting scholarships, or providing healthcare services to the poor. It is important for policy makers to understand the extent of a problem, such as how many people will be affected on a daily basis or annually. This information helps to frame a problem and provide valuable background for evaluating or using a policy in an ambiguous situation.