1. Economic Functions of Government
Unit #9

2. 6 Economic functions of government
Maintain legal and social framework
Maintain competition
Provide Public Goods and Services
Correct for Externalities
Stabilize the Economy
Redistribute Income

3. Maintain legal and social framework
Define and enforce property rights (court system etc.)
Establish a monetary system (Federal government controls the amount of money in circulation, regulates banks etc.)

4. Maintain competition
Create and enforce antitrust laws (government regulates prices of natural gas to homes, etc.)

5. Provide public goods and services
Public goods and services are those that markets will not provide in sufficient quantities (national defense, post offices, schools)

6. Correct for externalities
Reduce negative externalities (pollution in lakes and rivers by industrial waste)
Encourage increased production of goods and services that have positive externalities (public education, government subsidizes it because of the flow to society)

7. Stabilize the economy
Reduce unemployment and inflation and promote economic growth! (raising or lowering taxes etc.)

8. Redistribute income
Redistribute income from people who have higher incomes to those with lower incomes. (higher taxes for those with higher incomes helps pay for Welfare etc. )