The role of government in The role of government in the United States economy the United States economy

How does the United States How does the United States government promote and government promote and

regulate competition? regulate competition?

Role of GovernmentRole of Government

The government The government promotes and promotes and regulates competition. regulates competition.

Ways the government Ways the government promotes marketplace promotes marketplace competitioncompetition

Enforcing antitrust Enforcing antitrust legislation to discourage legislation to discourage the development of the development of monopoliesmonopolies

Engaging in global tradeEngaging in global trade Supporting business Supporting business

start-upsstart-ups

Role of GovernmentRole of Government

Government Government agencies that agencies that regulate businessregulate business

FCCFCC (Federal (Federal Communications Communications Commission)Commission)

EPAEPA (Environmental (Environmental Protection Agency)Protection Agency)

FTCFTC (Federal Trade (Federal Trade Commission)Commission)

These agencies These agencies oversee the way oversee the way individuals and individuals and companies do companies do business business

Role of GovernmentRole of Government

Government provides public goods Government provides public goods and services that individuals acting and services that individuals acting alone could not provide efficiently. alone could not provide efficiently.

Things like roads and transportation, Things like roads and transportation, and education are services that the and education are services that the government helps to fund. It would government helps to fund. It would be too expensive for private business be too expensive for private business to provide these services to the to provide these services to the public.public.

Role of GovernmentRole of Government

What are public What are public goods and goods and services?services?

Include such items as Include such items as interstate highways, interstate highways, postal service, and postal service, and national defensenational defense

Provide benefits to Provide benefits to many simultaneouslymany simultaneously

Would not be Would not be available if available if individuals had to individuals had to provide themprovide them

Role of GovernmentRole of Government

How do How do governments governments produce public produce public goods and goods and services? services?

Through tax Through tax revenuerevenue

Through borrowed Through borrowed funds funds

Role of GovernmentRole of Government

What is the impact What is the impact of taxation on the of taxation on the type of things that type of things that government can government can provide to the provide to the people?people?

Government tax Government tax increases reduce increases reduce the funds available the funds available for private and for private and business spending; business spending; tax decreases tax decreases increase funds for increase funds for private and private and business spending.business spending.

Role of the GovernmentRole of the Government

How does the money How does the money that the government that the government borrows affect borrows affect economic activity?economic activity?

Increased government Increased government borrowing reduces borrowing reduces funds available for funds available for borrowing by borrowing by individuals and individuals and businesses; decreased businesses; decreased government borrowing government borrowing increases funds increases funds available for available for borrowing by borrowing by individuals and individuals and businesses.businesses.

Role of the GovernmentRole of the Government How does government How does government

spending affect spending affect economic activity?economic activity?

Increased government Increased government spending increases spending increases demand, which may demand, which may increase employment increase employment and production; and production; decreased spending decreased spending reduces demand, which reduces demand, which may result in a slowing may result in a slowing of the economy.of the economy.

Increased government Increased government spending may result in spending may result in higher taxes; higher taxes; decreased government decreased government spending may result in spending may result in lower taxes. lower taxes.

Role of the GovernmentRole of the Government What is the 16What is the 16thth

Amendment to the Amendment to the Constitution, and why Constitution, and why is it important?is it important?

The 16th Amendment The 16th Amendment to the Constitution of to the Constitution of the United States of the United States of America authorizes America authorizes Congress to tax Congress to tax incomes (personal and incomes (personal and business). business).

This provided more This provided more money for the money for the government to fund government to fund the projects that it the projects that it needed to pay for so needed to pay for so that the U.S. economy that the U.S. economy could grow.could grow.

Role of the GovernmentRole of the Government

How does the How does the Federal Reserve Federal Reserve System regulates System regulates the money supply ?the money supply ?

The Federal The Federal Reserve System Reserve System (Fed) is the central (Fed) is the central bank of the United bank of the United States.States.

Federal Reserve Federal Reserve banks act as a banks act as a banker’s bank by banker’s bank by issuing currency issuing currency and regulating the and regulating the amount of money in amount of money in circulation.circulation.

Role of the GovernmentRole of the Government

The Federal The Federal Reserve System, Reserve System, acting as the acting as the central bank, central bank, regulates the regulates the money supply. money supply.

To slow the To slow the economy, the economy, the Federal Reserve Federal Reserve Bank restricts the Bank restricts the money supply, money supply, causing interest causing interest rates to rise; to rates to rise; to stimulate the stimulate the economy the Fed economy the Fed increases the money increases the money supply, causing supply, causing interest rates to interest rates to decline.decline.

Role of the GovernmentRole of the Government

What is the role of What is the role of the Federal the Federal Reserve System in Reserve System in maintaining a maintaining a stable economy? stable economy?

Ways the Federal Ways the Federal Reserve Bank Reserve Bank slows the slows the economyeconomy

Increases the Increases the reserve requirementreserve requirement

Raises the discount Raises the discount raterate

Sells government Sells government securitiessecurities

Role of the GovernmentRole of the Government

What is the role of What is the role of the Federal the Federal Reserve System in Reserve System in maintaining a maintaining a stable economy? stable economy?

Ways the Federal Ways the Federal Reserve Bank Reserve Bank stimulates the stimulates the economyeconomy

Lowers the reserve Lowers the reserve requirementrequirement

Lowers the Lowers the discount ratediscount rate

Purchases Purchases government government securities securities

Role of the GovernmentRole of the Government

What is the role of What is the role of the United States the United States government in government in protecting protecting consumer rights consumer rights and property and property rights? rights?

The United States The United States government passes government passes laws and creates laws and creates agencies to protect agencies to protect consumer rights consumer rights and property and property rights. rights.

Role of the GovernmentRole of the Government What is the role of the What is the role of the

United States United States government in government in protecting consumer protecting consumer rights and property rights and property rights? rights?

Individuals have the Individuals have the right of private right of private ownership, which is ownership, which is protected by negotiated protected by negotiated contracts that are contracts that are enforceable by law.enforceable by law.

Government agencies Government agencies establish guidelines that establish guidelines that protect public health protect public health and safety.and safety.

Consumers may take Consumers may take legal action against legal action against violations of consumer violations of consumer rights. rights.