1 / 8

Roles of Government in the economy

Roles of Government in the economy. Econ – Miss Feutz – 4/8. 6 Roles of government in the economy. Maintaining Legal and Social Framework Maintaining Competition Providing Public Goods and Services Redistributing Income Correcting for Externalities Stabilizing the Economy.

ima
Download Presentation

Roles of Government in the economy

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Roles of Government in the economy Econ – Miss Feutz – 4/8

  2. 6 Roles of government in the economy • Maintaining Legal and Social Framework • Maintaining Competition • Providing Public Goods and Services • Redistributing Income • Correcting for Externalities • Stabilizing the Economy

  3. Maintaining legal and social framework • Create and enforce laws, and provide courts – keeps people in check by creating boundaries • Establish a money system and system of trade – ensures that not too much money is created • Passes laws to regulate contracts – so everyone knows what to expect in court • Enforces property rights – so property is only owned by one person

  4. Maintaining competition • Creates and enforces Antitrust Laws – rules that the government creates to prevent businesses from working together to gain too much control • Regulates natural monopolies – industries in which there are not enough consumers to support more than one producer (Electricity or Water)

  5. Providing public goods and services • Providing goods and services that markets are unwilling or unable to provide – helps us all feel safe (National Defense, Roads) • There are costs and benefits to all government actions • Problem of free riders – people who use the product but don’t pay for it

  6. reDistributing income • The government takes taxes and redistributes the money back to the people in the form of services, safety nets, and goods • Those who make more money pay higher taxes • Social security comes from everyone’s paycheck, and is redistributed • Medicare is funded by taxes

  7. Correcting for externalities • Externalities: something that either positively or negatively impacts a third party, or someone/something not directly involved in the action • Subsidies are used to encourage positive externalities such as education • Subsidies: a government payment that supports a business or market • Taxes are collected to pay for things such as environmental clean-up • Examples

  8. Stabilizing the economy • The government uses taxes and creates budgets in an effort to fix problems in society such as a high unemployment rate • Example: Great Depression and Public Works Program

More Related