1. Georgia Council on Economic Education w w w. g c e e. o r g Focus: Understanding Economics in Civics and Government LESSON 4 What Are The Economic Functions Of Government?

2. Georgia Council on Economic Education w w w. g c e e. o r g List five economic activities of local, state and national government. What Are The Economic Functions Of Government?

3. Georgia Council on Economic Education w w w. g c e e. o r g 8 Out of 10 Economists Agree… 1.Maintain the Legal and Social Framework. -Define/Enforce Property Rights -Establish a Monetary System

4. Georgia Council on Economic Education w w w. g c e e. o r g

5. Georgia Council on Economic Education w w w. g c e e. o r g 2. Maintain Competition -Create/Enforce Antitrust Laws -Regulate Natural Monopolies

6. Georgia Council on Economic Education w w w. g c e e. o r g 3. Provide Public Goods and Services (market will not do it alone)

7. Georgia Council on Economic Education w w w. g c e e. o r g Externality- Costs or benefits arising from an economic activity that affects somebody other than the people engaged in the economic activity and are not reflected fully in prices. Economic side-effects.

8. Georgia Council on Economic Education w w w. g c e e. o r g 4. Correct For Externalities -Reduce Negative Externalities -Encourage Positive Externalities

9. Georgia Council on Economic Education w w w. g c e e. o r g 5.Stabilize the Economy -reduce unemployment -reduce inflation -promote growth

10. Georgia Council on Economic Education w w w. g c e e. o r g Fiscal v. Monetary Fiscal Policy- Actions taken by government to stabilize the economy. Taxing and Spending

11. Georgia Council on Economic Education w w w. g c e e. o r g Fiscal v. Monetary Monetary Policy- Actions taken by the Federal Reserve System to influence the economy. Controlling the money supply, Interest rates,

12. Georgia Council on Economic Education w w w. g c e e. o r g 6.Redistribute Income

13. Georgia Council on Economic Education w w w. g c e e. o r g LESSON 4-What Are The Economic Functions Of Government? 1. Maintain the Legal and Social Framework. 2. Maintain Competition 3.Provide Public Goods and Services 4.Correct For Externalities 5.Stabilize the Economy 6.Redistribute Income

14. Practice Complete the Headline Activity Georgia Council on Economic Education w w w. g c e e. o r g

15. ECONOMIC/SOCIAL GOALS How do we, as a country, evaluate economic performance? How are we doing?

16. ACTIVITY  Complete the following chart using pgs.41-43.

17. Economic/Social Goal What is it?How is it addressed in the U.S. economy? Economic Freedom Economic Efficiency Economic Equity Economic Security Full Employment Economic Growth

18. Economic/Social Goal Market EconomiesCommand Economies Economic Freedom Private ownership and control of resources Economic Efficiency Allocation decisions made by consumers and producers Economic Equity People free to make decisions but no guarantee of success. Market dictates income Economic Security Some safety net for health, retirement, income, etc. Full Employment Some unemployment is tolerated, but government is involved to limit it. Economic Growth Incentives for more production and avoid waste of resources. Investments in human and physical capital

19. Economic/Social Goal Market EconomiesCommand Economies Economic Freedom Private ownership and control of resources Government ownership, decisions made by government Economic Efficiency Allocation decisions made by consumers and producers Because allocation decisions are made by government, businesses are inefficient and often fail Economic Equity People free to make decisions but no guarantee of success. Market dictates income Wages set by government, may not make most of individuals skills and abilities Economic Security Some safety net for health, retirement, income, etc. Pensions, jobs, income, housing and health care all provided by government Full Employment Some unemployment is tolerated, but government is involved to limit it. No unemployment – government decides the work of society members Economic Growth Incentives for more production and avoid waste of resources. Investments in human and physical capital Growth targets set by planners. Growth is difficult because of lack of efficiency

20. How can your own economic growth be influenced by the investments that you make?

21.   Number One: Define Productivity  Number Two: Define Economic Growth  Number Three: Define Standard of Living

22.   SSEF6 The student will explain how productivity, economic growth, and future standards of living are influenced by investment in factories, machinery, new technology, and the health, education, and training of people.  a. Define productivity as the relationship of inputs to outputs.  b. Give illustrations of investment in equipment and technology and explain their relationship to economic growth.  c. Give examples of how investment in education can lead to a higher standard of living. What are you being asked to do?