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Chapter 11 The Role of Government in Our Economy.

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Presentation on theme: "Chapter 11 The Role of Government in Our Economy."— Presentation transcript:

1 Chapter 11 The Role of Government in Our Economy

2 How Government Regulates Business Governments role is to foster economic success, aid in the quality of life for it’s citizens, and helps people so they are not abused by businesses. Interstate commerce is business that takes place between states-Federal governments oversee. Intrastate commerce is business that takes place within states-State governments oversee. Companies that break the law can be fined, sued, or forced to close. 3 levels of government: –Federal runs the country. –State runs their state. –Local run counties, townships, cities.

3 Protecting Competition A monopoly occurs when a company controls an industry or is the only one to offer a product or service. –Problems: companies to not compete with other companies, this enables them to change prices and quality may not be good A oligopoly occurs when a small number of companies control an industry. A trust is a group of companies that band together to form a monopoly to cut out competition. Anti-trust laws were passed to promote competition. They allow federal government to break up monopolies, regulate them, or take control of them. (Federal Trade Commission)

4 Protecting Business Agreements Contracts are legally enforceable agreements between two or more parties. They can be written, verbal, or even formed over a handshake. Breach of contract occurs when one party fails to live up to the terms of the contract.

5 Protecting Creative Properties Copyright gives an artist the legal right to own their creations. Patent is a legal grant for the sole right to own an invention. The federal government grants patents. Trademark is a name, a symbol, or a characteristic that identifies a product. It is also registered with the government. Only the owner of the trademark can legally use it.

6 Governments Role in Society Government provides key services to the public. It also gives incentives to businesses and people. It also provides jobs and distributes income.

7 Providing Goods and Services Businesses offer goods and services to people to make a profit. Highways, bridges, water treatment plants, and national defense are examples of public goods and services. Pubic goods and services are items provided by government and paid for using tax money. Private goods and services are items that consumers purchase directly from businesses. Government provides parks, libraries, museums, and swimming pools. These improve people’s quality of life. Governments pay for them with revenues they receive. Revenue is the income that governments get from all sources. Privatization occurs when a business offers a public good or service. The government body that pays for it oversees the business. Ex. Most cafes’ in government buildings are run by private business, not government.

8 Aiding Citizens Through Transfer Payments A transfer payment is a government expense that is provided to help people. These payments ensure that people have money when they need it. Unemployment, Social Security, and veterans’ benefits are forms of transfer payments.

9 Providing Employment The government is the largest employer in the United States. More than 3 million people work for the federal government.

10 Consuming Goods and Services Government is also the largest consumer of goods and services.

11 Supporting Business Small Business Administration (SBA) is a US agency that encourages the development of small businesses. The SBA offers loans and advice to people who want to open small businesses. Subsidies are monetary grants given to producers or consumers to encourage certain behaviors. They are usually given to firms that are considered to benefit the public.

12 How Government is Funded Tax is an amount of money people and businesses pay governments to help run the nation, state, county, city, or town. Your income tax revenue helps pay for public goods and services and provide money for transfer payments. Some people may not receive direct benefits from all the taxes they pay.

13 Providing Incentives Tax Incentive is a temporary reduction or elimination of a tax that is meant to encourage or discourage an activity. Tax deductions for mortgage interest and property tax expenses encourage home ownership. Government also tries to discourage certain behaviors. Ex. Tax on cigarettes.


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