What is federalism?

Federalism is defined as a government system where power is divided between a central authority and smaller political units, such as states or provinces. This framework allows for a balance of power, meaning that both the national and state governments can operate independently within their own spheres of authority but are also able to share certain powers.

In a federal system, the central government typically handles national issues, such as defense and foreign policy, while states have authority over more localized matters, such as education and transportation. This division of responsibilities helps maintain a check on power and can promote more tailored governance that reflects the needs of diverse populations in various regions.

The other options do not accurately capture the essence of federalism. For example, a system where states hold all power does not recognize the role of a central authority, while local governance only pertains to smaller municipalities without the influence of a broader national framework. Likewise, a method of economic management does not pertain to the political structure and division of powers that characterizes federalism.