Transcript Role of Government

Chapter 12
Role of Government
Section 1
Growth of Government
Read Section 1
Post Reading Notes
Section 2
Economic Goals
●Regulating Business
1. Preventing abuses
-Working conditions
-Discrimination
-Low pay
2. Protecting consumers
-Food and Drug Administration
-Consumer Product Safety Commission
-Federal Trade Commission
-Federal Communications Commission
3. Limiting negative externalities
-Limiting the negative
side effects of
economic activity
-Environmental
Protection Agency
-Nuclear Regulatory
Commission
4. Promoting competition
-Enforcement of antitrust
legislation
-Sherman Antitrust Act
● Providing Public Goods
-Public goods for all citizens
-Tax citizens for public goods
-Public schools
-Public parks
-Federal, State, and local
governments share the
responsibility
-Shared
Responsibility
-Courts, corrections departments, and
law enforcement are found at each
level of government
-Public education is local but receives
funding from the national government
-An exception is national defense
-Privatization
-the sale of government property or the
handling of government services by
private businesses.
● Promoting
Economic Well Being
-Improved Standard of Living
-How people live
-How many goods and
services are consumed
-Redistributing Income
-Reduce the gap between
rich and poor
-Transfer payments
-Taking money from one
group and distributing it
to another group
● Stabilizing the Economy
-This falls on the Federal Government
-Responding to market failures
-and…
● Moderating the Business Cycle
-Minimize the highs and lows of the cycle
-Through taxation and spending
-Market failures
-Externalities
-inability and unwillingness to produce
public goods
-Inadequate business competition
-Consumer’s inadequate knowledge of
market conditions
Section 3
Government and the Public
● Identifying the Public Interest
- This is based on the needs of many people
- Public interest can outweigh the wishes of the
individual
● Effects of Government Intervention
1. Prices
-Often causes prices to rise
-Even with a price floor
-Can raise production costs
2. Services
- Can be increased through regulation
- Example would be cable channels
available
- Other regulations can decrease services
- Example would be if producers
were forced to keep prices low then
they might not offer as many so they
would not lose money
3. Profits
- Private companies’ profits may increase
when government regulations result in
higher prices and difficult market entry
- Example is the airline industry and
less nonstop flights increased profits
- Generally, regulation tends to lower profits
4. Productivity
- Some regulation can cause labor
productivity to decline
- Especially as workers try to meet
regulations
-Quantity
-Or size (fisheries)
● Influencing Government
- Role of the individual
- Vote
- Role of Interest Groups
- Interest groups are organizations of
citizens who work together to achieve
their common goals
- Lobbyists help
- People hired to express a
particular point of view to
legislators