Transcript Chapter 5–Government Role

THE GOVERNMENT’S ROLE
PURPOSE OF TAXES
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To provide Public goods and services:
 National
Defense
 Police and fire protection
 Courts and correctional institutions.
 Public Parks
 Streets, highways, and bridge construction and
maintenance.
 Public education
 Public transportation.
REDISTRIBUTING INCOME
 The
idea is to help those who lack sufficient income
due to illness, age, unemployment or other
circumstances.
 The government works to reduce economic
inequality by redistributing income. Money
collected from taxpayers is used to fund programs
that assist people in need.
SOME PROGRAMS MANAGE THE RETRIBUTIONS
OF INCOME:
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Social Security is a government insurance program that
is sponsored by the federal government and pays
benefits to qualified people. The benefits are paid for by
a required tax on the earning of most workers.
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Social Security Benefits
Retirement Benefits—at age 67 when people who have paid into
social security are eligible to receive monthly benefits.
 Survivors’ Benefits—When an insured worker dies the surviving
spouse and any children are paid benefits to replace lost income.
 Disability Benefits—Workers who develop a physical or mental
condition that prevents them from working may receive these
benefits.
 Medicare –This is a program that pays for some of the cost of
medical expenses for those over 65 and those with certain
disabilities.
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PUBLIC ASSISTANCE PROGRAMS
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Public assistance programs provide aid to individuals based on need,
regardless of whether they have paid taxes into the program. Examples:
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Provides Temporary Assistance to Needy Families.
Supplemental Security Income—Provides cash for food, clothing and shelter to
the elderly
Supplemental Food Program for Women, Infants, and children—provides
nutritional food and counseling to women who are pregnant or have just given
birth. It also provides food to infants and children up to the age of 5.
National School Lunch and School Breakfast programs—Provides schools with
surplus food for school lunches
Food Distribution Programs
Medicaid—Jointly funded by federal and state governments it provides healthrelated services to low-income and needy people.
State Children’s Health Insurance program—children from low income families
who don’t have health insurance and don’t qualify for Medicare can receive
health insurance through this program
Housing Programs—HUD provides several types of programs to help people rent
or buy affordable housing.
REGULATING ECONOMIC ACTIVITY
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People or groups may be unintentionally hurt or helped
as a result of economic activity. The government tries to
prevent these harmful side effect.
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Protecting the environment—EPA—The federal government
has the Environmental Protection Agency which sets
regulations for pollutants and takes action against polluters.
Protecting Consumers—The government helps to ensure that
unsafe products are removed from the market. Also limits
the distribution of potential harmful material.
Protecting workers—The federal government sets minimum
wages and regulates child labor. In addition employers must
provide safe working conditions for employees.
PROMOTING COMPETITION
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Federal and state governments have therefore
enacted laws designed to encourage competition.
Monopoly – sometimes called a trust, is a situation in
which a single company controls the supply of a good or
service for which there is no close substitute.
 Reasons some monopolies do exist
 No
other company wants to produce the good
 A company invents a new product and gains exclusive rights.
ANTITRUST LAWS
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These laws are designed to regulate unfair
business practices that reduce competition.
Antitrust laws are enforced by the Federal Trade
Commission.
ENSURING ECONOMIC STABILITY
When the economy becomes unstable, both
businesses and consumers suffer. The
government prevents this from happening by
implementing fiscal and monetary policies
 The economy is at risk for a serious decline
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 Black
Friday
Fiscal Policy- Involves adjusting its policies about taxing and
spending.
*Monetary Policy– Involves regulating interest rates and money
supply.
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