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. 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. 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. 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. Ensure Economic Stability
keep the unemployment rate low
keep the inflation rate low
a rise in the general price level of goods
and services
