1 Role of Government SECTION 1: Growth of Government SECTION 2: Economic Goals SECTION 3: Government and the Public CHAPTER 12

2 Objectives: What factors influence the growth of government? Why have government expenditures increased over time? How do federal, state, and local governments spend their money? Growth of Government SECTION 1

3 Factors that influence the growth of government: population growth changing public attitudes a rising standard of living national emergencies Growth of Government SECTION 1

4 Government spending has grown to pay for government programs. Growth of Government SECTION 1

5 Government spending: natural resources—federal insurance—federal and state corrections—state hospitals and health—local and state highways—local and state law enforcement—local fire protection—local sewerage—local housing and community development—local interest—federal, state, and local public welfare—federal, state, and local education—federal, state, and local government administration— federal, state, and local Growth of Government SECTION 1

6 Objectives: Why does the government regulate businesses? How does the government work to provide public goods? In what ways does the government promote individuals’ well-being? How does the government work to stabilize the economy? Economic Goals SECTION 2

7 Reasons government regulates businesses: preventing abuses protecting consumers limiting negative externalities promoting competition Economic Goals SECTION 2

8 Ways the government works to provide public goods: by sharing funding and distribution of public goods among all levels of government through privatization Economic Goals SECTION 2

9 Ways the government promotes individuals’ well-being: by improving the standard of living by redistributing income Economic Goals SECTION 2

10 Ways the government works to stabilize the economy: by moderating the business cycle by responding to market failures Economic Goals SECTION 2

11 Objectives: How does the government determine the public interest? What consequences may result from government promotion of the public interest? How can individuals and interest groups affect government policies? Government and the Public SECTION 3

12 Government determines the public interest by identifying the collective needs of many people over the wishes of an individual or specific group. Government and the Public SECTION 3

13 Potential consequences of government public-interest policies: higher prices declines or increases in service levels reductions or increases in profit decreases in productivity Government and the Public SECTION 3

14 Ways to influence government policies Individuals: by voting in elections by becoming informed about issues, policy, and candidates through political activism Interest groups: by donating money to political campaigns by encouraging groups to vote for a particular candidate by hiring lobbyists to express the group’s point of view Government and the Public SECTION 3

What are the key factors that encourage government expansion? 2. 2.What are the main purposes of government regulation of businesses? 3. 3.Why do governments provide public goods? 4. 4.How does the government promote economic well- being? 5. 5.How does the government work to promote the public interest? 6. 6.What effects can regulation have on prices, service, profits, and productivity? Wrap-Up CHAPTER 12