Governmental Economic Responsibilities


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Economic Definitions

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Governmental Economic Responsibilities

  1. 1. Government Economic Responsibilities They do what?
  2. 2. Government Responsibilities <ul><li>The Federal Government has many broad responsibilities in regards to maintaining the national economy. </li></ul><ul><li>These responsibilities range from managing national trends to assisting individuals and businesses to succeed. </li></ul>
  3. 3. Categories of Responsibilities <ul><li>Macroeconomics, defined by as : The branch of economics that studies the entire economy, especially such topics as aggregate production, unemployment, inflation, and business cycles. </li></ul><ul><li>Microeconomics, again from, defined as: The branch of economics that studies the parts of the economy, especially such topics as markets, prices, industries, demand, and supply. </li></ul>
  4. 4. Macroeconomics <ul><li>This overview lesson will focus on the Macroeconomic concepts involved in the governmental roles of Monitoring the Economy, Strengthening the Economy, and Promoting Productivity and Innovation. </li></ul>
  5. 5. Monitoring the Economy <ul><li>The total value of all goods and services produced by a country are referred to as the country’s Gross Domestic Product (GDP) . </li></ul><ul><li>This number is then used by the Federal Government to determine whether or not the National Economy is growing or contracting in tune with the natural Business Cycle. </li></ul>
  6. 6. Business Cycle <ul><ul><li>The Business Cycle is defined by as: The recurring expansions and contractions of the national economy. </li></ul></ul><ul><ul><li>A complete cycle typically lasts from three to five year, and is divided into four phases: </li></ul></ul><ul><ul><ul><li>Expansion </li></ul></ul></ul><ul><ul><ul><li>Peak </li></ul></ul></ul><ul><ul><ul><li>Contraction </li></ul></ul></ul><ul><ul><ul><li>Trough </li></ul></ul></ul><ul><ul><li>Unemployment inevitably rises during contractions and inflation tends to worsen during expansions. </li></ul></ul><ul><ul><li>To avoid the inflation and unemployment problems of business cycles, the Federal Government enacts fiscal and monetary policies. </li></ul></ul>
  7. 7. Economic Strengthening <ul><li>The Federal Government takes an active role in maintaining the strength of the National Economy by promoting policies that foster Stability, Growth, and High Employment Levels. </li></ul><ul><li>To accomplish these goals, the Federal Government closely monitors Economic Indicators such as the Consumer Price Index (CPI), a measure of the aggregate prices of a set group of goods (Definition by B. Coil), the GDP, and the national and regional unemployment rates. </li></ul><ul><li>Using this information, the Federal Government can then propose and implement policies to either enhance or restrict different economic activities and trends. </li></ul>
  8. 8. Productivity and Innovation <ul><li>In order to facilitate the growth of the GDP, the Federal Government takes in active role in bolstering Technological Innovation in order to enhance Productivity. </li></ul><ul><li>Enhanced Productivity allows businesses to operate more efficiently. </li></ul>
  9. 9. But on the Other Hand… <ul><li>This increased efficiency can, and does, often lead to reductions in a company’s workforce, the obsolescence of equipment, and the need to relocate production. </li></ul><ul><li>The Federal Government acts to ensure that these trends do not harm the GDP by providing for retraining of workers and retooling factors to return them to Productivity. </li></ul><ul><li>In addition, the Federal Government promotes Innovation by funding research and protecting the rights of inventors through copyrights and patents. </li></ul>