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Economic Function of Government

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Economic Function of Government

  1. 1. The Functions of Government in our Economy
  2. 2. Regulate Business Government regulation has four main purposes:  Preventing abuses-prevents business from taking  unfair advantage of workers (discrimination, etc.) Protecting consumers-FDA, FCC, SEC  Limiting negative externalities-limit the negative  effect of the economy on citizens (pollution, traffic congestion, soil erosion, etc.) Promoting competition-creating and enforcing of the  anti-trust laws (no monopolies)
  3. 3. Provide Public Goods a special type of goods or services that the  government tries to supply to its citizens streetlights, national defense, court systems,  correctional institutions, law enforcement merit goods-a good that is considered  “socially acceptable” museums→Smithsonian Institute  demerit goods-a good that is considered  “socially unacceptable” alcohol, tobacco, firearms→strict taxation and/or  regulation
  4. 4. Redistribute Income using taxes to assist citizens in need  Social Insurance Programs-MUST  PAY TO RECEIVE Citizen’s paychecks  Pay benefits to retired and/or disabled  workers social security  worker’s compensation 
  5. 5. Redistribute Income Public Assistance Programs-RECEIVE  REGARDLESS OF WHETHER TAXES HAVE BEEN PAID INTO PROGRAM welfare-payments to citizen’s based on need  W.I.C.-women, infants, & children  $ to single mothers; low income  C.H.I.P.-Children’s Health Insurance Program  Medicaid-free healthcare for low income persons 
  6. 6. Ensure Economic Stability keep the unemployment rate low  keep the inflation rate low  a rise in the general price level of goods  and services

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