Government policies significantly impact economic inequality through mechanisms like taxation, social welfare, and public spending. Progressive tax policies can reduce inequality by imposing higher rates on wealthier individuals, reallocating resources to fund social services benefiting lower-income groups. Conversely, regressive policies can exacerbate disparities by providing tax breaks or incentives that primarily favor the affluent. Furthermore, investment in education and healthcare can promote equality of opportunity, while underfunded social programs can perpetuate cycles of poverty and hinder upward mobility, influencing overall economic stability.