Maintaining Legal and Social Framework

1. Maintaining Legal and Social Framework • Example: • Create laws and provide courts • Provide information and services to help the economy function better • Establish a monetary system • Define & enforce property rights

2. Providing Public Goods and Services • Example: • Provide goods & services that markets are unable or unwilling to provide • Such as: • National defense • National park system

3. Maintaining Competition • Example: • Create and enforce antitrust laws • Regulate natural monopolies

4. Redistributing Income • Example: • Higher income tax rates for rich than for poor • Provide Social Security • Aid dependent children with programs such as Medicare and Medicaid

5. Correcting for Externalities • Example: • Money to encourage positive externalities • Such as education • Taxes to reduce negative externalities • Such as environmental pollution

6. Stabilizing the Economy • Example: • Use government budgets and/or the money supply to promote economic growth, control inflation, & reduce unemployment